WASHINGTON -- Sales of new homes dipped in January but the final quarter of 2011 was stronger than first estimated.
The Commerce Department said Friday that new-home sales fell 0.9 percent last month to a seasonally adjusted annual rate of 321,000 homes. That followed four straight months of gains in which home sales rose 10 percent.
The gains came after the government upwardly revised October, November and December's figures. December's annual sales pace of 324,000 was the highest in a year.
Even with more sales, just 304,000 new homes were sold in 2011 -- the fewest on records dating back to 1963. And new homes are selling well below the 700,000-per-year rate that economists equate with healthy markets.
Still, the pickup in sales at the end of last year coincides with other improvements in the housing market and should bolster the view that the depressed sector is starting to revive.
Pierre Ellis, an economist at Decision Economics, said the improvement lends "additional support to the housing market," and mirrors other positive signs in the industry.
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Builders are growing more optimistic after seeing more people express interest in buying this year. They've also sought more permits to build single-family homes -- one of several encouraging signs across the housing industry.
Sales prices for new homes are rising. The median sales price of a new home rose 0.3 percent in January to $217,100.
In January, sales of previously occupied homes reached their highest level in nearly two years. And they have risen more than 13 percent in the past six months. Mortgage rates have never been lower.
Most importantly, hiring has improved, which is critical to a housing rebound. The economy added more than 200,000 net jobs in both December and January. And economists anticipate another big month of hiring in February after seeing unemployment benefit applications fall to the lowest level in nearly four years. The unemployment rate was 8.3 percent in January, its lowest level in nearly three years.
Economists caution that housing is a long way from fully recovering. Builders have stopped working on many projects because it's been hard for them to get financing or to compete with cheaper resale homes. For many Americans, buying a home remains too big a risk more than four years after the housing bubble burst.
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.
A key reason for the dismal 2011 sales is that builders must compete with foreclosures and short sales -- when lenders accept less for a house than what is owed on the mortgage
Builders ended 2011 with a third straight year of dismal home construction and the worst on record for single-family home building. But in a hopeful sign, single-family home construction, which makes up 70 percent of the market, increased in each of the last three months.
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Total population (2010): 1,130,490 Median sales price (Q3 2011): $224,300 % ch. median sales price (Q3 2010-Q3 2011): 7.3% Sales volume (# units sold Nov. 2010-Oct. 2011): 12,156 % ch. sales volume (Nov. 2010-Oct. 2011 vs. Nov. 2009-Oct. 2010): -39.8% Sales per population (Nov. 2010-Oct. 2011): 1 sale per 93 people Unemployment rate (Nov. 2011): 7.8% Foreclosure activity rate (Nov. 2011): 1 in 1,295 units Walk Score: 40
Despite a steep drop in sales, the Raleigh-Cary market saw considerable price appreciation last year, with its median sales price for single-family homes jumping 7.3 percent from third-quarter 2010 to third-quarter 2011.
At $224,300, the Raleigh-Cary metro had the highest median sales price among the 10 markets on this list and was the only market with a median sales price above the U.S. median. Nonetheless, its affordability rate stayed above the national level, with 73.6 percent of its homes affordable to households earning the area's median income, according to the National Association of Home Builders/Wells Fargo Housing Opportunity Index.
Total population (2010): 623,061 Median sales price (Q3 2011): $120,900 % ch. median sales price (Q3 2010-Q3 2011): 5.5% Sales volume (# units sold Nov. 2010-Oct. 2011): 9,002 % ch. sales volume (Nov. 2010-Oct. 2011 vs. Nov. 2009-Oct. 2010): -10.8% Sales per population (Nov. 2010-Oct. 2011): 1 sale per 69 people Unemployment rate (Nov. 2011): 7.1% Foreclosure activity rate (Nov. 2011): 1 in 958 units Walk Score: 41
Like Raleigh-Cary and other markets on this list, home prices in the Wichita metro area weathered the housing downturn comparatively unscathed.
"Inventory has been up and sales have slowed, but values have been relatively unaffected," said Mike Grbic, associate broker and owner of Mike Grbic Real Estate Experts -- Select Homes in Wichita.
The Wichita metro's median sales price rose 5.5 percent from third-quarter 2010 to third-quarter 2011, to $120,900. For 2011 as a whole, the city of Wichita posted one of the top 10 year-over-year median sales price hikes nationwide, up 17.2 percent, according to a chart provided for this report by Onboard Informatics.
Total population (2010): 1,054,323 Median sales price (Q3 2011): $123,400 % ch. median sales price (Q3 2010-Q3 2011): 1.4% Sales volume (# units sold Nov. 2010-Oct. 2011): 11,240 % ch. sales volume (Nov. 2010-Oct. 2011 vs. Nov. 2009-Oct. 2010): -18.6% Sales per population (Nov. 2010-Oct. 2011): 1 sale per 94 people Unemployment rate (Nov. 2011): 6.9% Foreclosure activity rate (Nov. 2011): 1 in 4,001 units Walk Score: 63
The Rochester metro area had a 6.9 percent jobless rate in November, compared to an 8.2 percent rate nationwide. The area has seen employment grow 2.8 percent since its fourth-quarter 2009 trough, while employment in the nation as a whole has risen 1.3 percent during that time.
The metro has one of the top 20 fastest job growth rates nationwide, according to Brookings.
Of 100 major metro areas, Rochester is one of only 22 to have regained more than half of the jobs lost between its pre-recession high and post-recession low, the think tank said.
While Rochester has long been associated with the Eastman Kodak Co., the area's economic performance no longer depends on the declining fortunes of that company.
Total population (2010): 569,633 Median sales price (Q3 2011): $157,900 % ch. median sales price (Q3 2010-Q3 2011): 0.8% Sales volume (# units sold Nov. 2010-Oct. 2011): 7,448 % ch. sales volume (Nov. 2010-Oct. 2011 vs. Nov. 2009-Oct. 2010): -25.4% Sales per population (Nov. 2010-Oct. 2011): 1 sale per 76 people Unemployment rate (Nov. 2011): 5.3% Foreclosure activity rate (Nov. 2011): 1 in 863 units Walk Score: 48
The Des Moines-West Des Moines metro area had a 5.3 percent unemployment rate in November -- among the lowest rates in the country. Moody's predicts the area will see a further 2 percent jump in jobs from third-quarter 2011 to third-quarter 2012.
"Strong Midwestern values, a highly educated and productive workforce, and the culmination of many years of cooperation between civic, corporate and government make the greater Des Moines area an attractive city to call home (and an) oasis of prosperity," said Brian Wentz, an agent at Burnett Realty in Clive, a suburb of Des Moines.
"That has attracted and retained top employers and led to many years of sustained growth, with no end in sight."
Total population (2010): 528,143 Median sales price (Q3 2011): $128,700 % ch. median sales price (Q3 2010-Q3 2011): 7.3% Sales volume (# units sold Nov. 2010-Oct. 2011): 6,109 % ch. sales volume (Nov. 2010-Oct. 2011 vs. Nov. 2009-Oct. 2010): -18% Sales per population (Nov. 2010-Oct. 2011): 1 sale per 86 people Unemployment rate (Nov. 2011): 7.5% Foreclosure activity rate (Nov. 2011): 1 in 973 units Walk Score: 37
Located between Nashville, Tenn., and Atlanta, the Chattanooga metro area enjoys a low unemployment rate, high affordability, and the highest rate of out-of-state in-migration among the 10 markets.
The area's median sales price rose 7.3 percent in the year through third-quarter 2011, to $128,700. The vast majority of homes in the area, 81.3 percent, were affordable to median-income households during that quarter.
"One of Chattanooga's largest resident communities, (which) historically had enjoyed 3 to 3.7 percent on an average differential between list and sales price ... increased (to a) 4 to 4.9 percent differential from 2010 to 2011," said Linda Brock, an affiliate broker at Prudential RealtyCenter.com in Chattanooga.