Nationwide, new home sales had worst year in 2011

Article Courtesy of The Palm Beach Post

By Kimberly Miller

Published January 31, 2012  

Sales of new homes nationwide slumped to a record low in 2011, ending the year on an unexpected downward slide.

For three straight months, homebuyers had ramped up purchases and hopes that 2011 was headed for a stronger finish, but a 2.2 percent decrease in December sales to a seasonally adjusted annual rate of 307,000 dashed aspirations of an extended resurgence.

The sales marked the lowest on record since measurements began in 1963, according to a Commerce Department report released Thursday.

"It appears to have hit rock bottom," said Stan Geberer, a senior associate with the Orlando-based consulting firm Fishkind & Associates, who is predicting higher Florida sales in 2012.

Nationally, 2011's sales total was less than half of what economists said is typical for a healthy market, and 75 percent below the peak sales year of 2005.

The South, a 17-state region that includes Florida, saw the biggest December dip, falling 10 percent from November and nearly 5 percent from the same time in 2010.

But Palm Beach County builders remain optimistic, pointing to increases in newly started home construction that picked up at the end of 2011 and crowds of interested buyers hitting open houses.

"The best sub-markets are getting buyers and the best companies are reasonably prosperous," said Brad Hunter, chief economist for the Royal Palm Beach-based firm MetroStudy.

The median sales price of a new home nationally fell 12.8 percent from 2010 to $210,300.

Hunter said he was surprised by the December drop in sales, considering the end of 2011 experienced a spike in new home starts locally.

During the fourth quarter of 2011, construction began on 406 new Palm Beach County homes, up from 318 in the previous quarter, MetroStudy found.

At the same time, total new home inventory in Palm Beach County fell to 1,037, a 20 percent decline from the peak inventory year of 2007.

"Consumer confidence, as well as builder confidence, is doing better," Hunter said. "They are still in the pits, but they're climbing out at a steady pace."

Geberer is predicting 43,000 new home starts in Florida in 2012, up from 30,000 last year and 26,000 in 2010.

But those annual tallies are down from Florida's more typical pre-boom housing starts of between 100,000 and 120,000.

"When you've spent three years tearing down the size of your organization, firing a lot of staff and watching the value of your assets plummet, your perspective on what is good news changes," Geberer said. "We're at such dismally low levels that any glimmer of hope tends to bring rejoicing."

Recent debuts of new housing developments in Palm Beach County have attracted hundreds of interested buyers.

Florida homebuilder DiVosta held an open house for its 264-unit Castellina development in Wellington earlier this month that drew an estimated 1,200 people.

About 600 people signed up to tour The Preserve at Bay Hill Estates, a GL Homes community off Northlake Boulevard and west of Beeline Highway.

GL Homes, based in Sunrise, is also opening The Bridges, a 622-home community near Delray Beach early next month. Prices in The Bridges range from $500,000 to more than $2 million, according to the GL Homes website.

"There is still a demand to live in Palm Beach County," said GL Homes Senior Vice President for Sales Jill DiDonna, before the Jan. 7 debut of The Preserve. "It's still a very desirable area."

Though new-home sales represent less than 10 percent of the housing market, they have an outsize impact on the economy. Each home built creates an average of three jobs for a year and generates about $90,000 in tax revenue, according to the National Association of Home Builders.