Builders started more houses last year than in 2009. But where are the buyers?
2010 was the "worst year ever" for new home sales, according to David Crowe, chief economist at the National Association of Home Builders (NAHB), which is holding its annual convention and trade show this week in Orlando.
"Seven of the 11 months for which we have data set new all-time lows" for sales, Crowe told National Mortgage News.
In November, the latest month for which Commerce Department figures are available, builders were selling homes at a rate of 290,000 units annualized on a seasonally adjusted basis. That's down 21% from 368,000 a year earlier.
But actual sales in November totaled just 21,000 units. And for the first 11 months of 2010, builders sold 348,000 houses compared to 485,000 in 2008 and 374,000 in 2010.
With those kinds of numbers, it's a head-scratcher as to why builders should erect even more houses. Indeed, single-family housing starts rose 6.9% in November to a 465,000 unit seasonally adjusted annual rate. At the same time, single-family permit activity, a harbinger of future construction, was up 3% to a rate of 416,000 units, the highest level since June.
Despite these increases, the inventory of unsold but completed houses fell to 197,000 in November, the first time in 42 years this measure has dropped below the 200,000 level. Still, at the current slow sales pace, an 8.2 months' supply on finished product is sitting on builders' shelves.
Whatever the reason builders continue to work, far fewer of them will journey to Orlando for their biggest event of the year than the last time they were in town.
Indeed, in the four consecutive years the NAHB last met in Central Florida (2005-2008), the show drew an average of 101,000 attendees and filled three-quarters of the cavernous Orange County Convention Center's 2 million square feet of exhibit space.
This week, only 55,000 are expected, and the displays of sinks, tubs, faucets and other building product will easily fit inside the million-foot West building.