For a
developed economy like the U.S., for instance, the overall size of homes for sale Grafton (especially the new
ones) is always considered an economic indicator, one of the many that
signifies the health of a nation’s economy. For the reason that the sales of
homes trigger consumption, they have a significant market impact.
New
home sales also serve as a good indicator of economic turning points due to its
consumer income sensitivity. In general, with when economic conditions slow
down, new home sales serves as an early indicator of such a depression.
Basics
A new
home sale is when the buyer signs the paperwork and gives the home builder a
deposit. This is always the case since most new homes are not constructed until
there is a buyer. Here, the buyer can also decide to customize all or part of
the home’s features, which includes countertops, floor covering, and other fixtures.
For
market indications, the Census Bureau releases the monthly estimates on these
sales and gives them as an annual rate. If the sales will continues at the
present rate, it is read as the figure that will sell within the year.
Spec homes
The
Bureau also includes in the calculation the new spec homes in its sales
figures, even though there is no buyer. Usually, these are the model homes that
the home builders use to spur sales in the development.
Spec
homes are counted as new home sales once the permit has been issued or
construction has started. These new home sale is the first step in the 9 to
12-month process where if the new home sales will pick up, the closings will
rise in about a year.
Other indicators
There
are other new home economic indicators which the Census Bureau takes into
account. First is the inventory. This is the total of homes that are available
for sale, but are not yet sold. (This is reported every month by the NAHB.)
The
other indicator is the number of months of supply. This number is how many
months it would take to sell all the houses in inventory. This is based on the
sales rate and the inventory, and this is also reported by the NAHB every
month.
The
last indicator is the sales price. These
are reported on both the median and the average3 new home sales price.
Uses of indicators
The
indicators tell stories on the health of the home building industry and real
estate in general. For instance, if the home starts are steady but the housing
starts decline it would take a toll on home sales.
Many
buyers might not want to wait longer than a year. This also means that there is
a shortage of lumber, concrete or workers in the building industry. These
shortages can drive up costs and consequently the sales price. Overall, it can
further decrease demand for new homes.
If
the mortgages are declining, the home builder ends up with inventory of unsold
homes for sale, which means demand is high but home owners can’t get mortgages.
Declining home closings in homes for sale mean the housing market is weak.
