By Vicki Needham - 02/24/12 04:30 PM EST
Builders must still compete with a glut of distressed homes on the market that sell for lower prices.
“Outside of the upwardly revised December number, this is actually the best sales pace we’ve seen since April of 2010, when the homebuyer tax credit was in effect,” said Barry Rutenberg, chairman of the National Association of Home Builders (NAHB).
“Moreover, many recent indicators — from our builder confidence surveys to housing starts and permits data and the expanding list of improving local markets — have provided evidence that consumers are becoming more confident about making a home purchase.”
The boost at the end of the year lends more evidence to a gradually improving housing market.
Housing experts have growing confidence in the sector, and have predicted its slow improvement this year leading to an accelerated pace next year.
Still, a full recovery is likely years away.
“New-home sales this January were up 3.5 percent from the same time last year, and up 1 percent from the fourth quarter average for 2011,” said David Crowe, NAHB’s chief economist.
“This is indicative of the incremental, steady progress that the market is making toward recovery in conjunction with modest economic and job growth,” he said.
Employers added 243,000 jobs last month, and the unemployment rate dropped to its lowest level in nearly three years, but that pace of hiring will need to continue to bolster the economic recovery.
Despite historically low interest rates, credit conditions remain tight, and appraisal issues that are forcing an inordinately high number of cancellations are slowing the pace of the recovery.
The median sales price of new houses sold in January was $217,100; the average sales price was $261,600.