New home sales volumes have increased over the last few months.
From February through May of this year we averaged less than ten new homes closed per month. Since May things have perked up somewaht. The last two months have seen thirty a month closed. That's a far cry from the peak of 2005 and 2006 when we closed 50+ a month but it's an improvement over the last 12 months.
One of the reasons for the improved numbers is the fact that most builders are building smaller homes. Average prices of new homes has dropped from a high of $260,000 18 months ago to the mid $220,000s we see today. Many of the high-end builders have either closed up shop or adjusted to the new realities of today's market.
A look at the following charts will tell you that things have in fact changed.
Thhe chart above tracks the sales prices of newly constructed homes and existing homes in the under-ten and the over-ten-year-old categories for the last 37 months. The black line shows the monthly median price of all classes of homes. The chart below indicates the numbers of homes sold in the three different classes.
The remaining contractors are made up of a few large builders and about half of the medium to small new home contractors we had in 2005-2006. We are also seeing the smaller-home niche being filled by a new breed of contractors that have trimmed their costs and have a high-quality low-volume business model that seems to be working. These builders use a minimum of outside specialists, do a lot of the work themselves and are surprisingly well funded. An interesting development!