It seems the old real estate adage “If you build it, the buyers will come” has proven to be an effective motto as home developers and real estate agents throughout the country have seen a rise in new home purchases in August. This report comes hot on the tails of a surge in home builder confidence to levels not seen in nearly a decade. With these two factors working together, it may be possible to see new construction projects popping up in communities such as San Diego, which has been struggling to maintain a healthy inventory to keep home sales in positive territory.
The U.S. Commerce Department released figures Wednesday, September 24, indicating that new home sales have climbed to their highest level in six years. The department estimated that new home sales increased by 18 percent in from July to August, resulting in an annual rate of 504,000. This value is about one-third ahead of August 2013 and is the highest amount of new homes sold since May 2008.
Regionally, it seems the West Coast is king. The Commerce Department reported that the number of new homes sold in the West rose by a whopping 50 percent last month.
This report has been known to be somewhat volatile. New home sales rose just 2 percent in July and had taken a plunge in June, however this spurt may be what builders need to see in order to begin planning more single-family home projects for an eager market.
San Diego Home Market Could Benefit From Inventory Surge
According to many economists, one major factor that has been holding back the recovery of the housing market is the refusal of home supply numbers to climb to a healthy rate. All over the country, and most notably in San Diego, home inventory has been lagging at below-average levels. In turn prices have been climbing at unfeasible rates, pricing many buyers right out of the market.
According to Altos Research, a California-based real estate analytics company, inventory has been on the rise in San Diego. However, progress has been slow and gradual with about 2,025 properties noted on the market as of September 19.
This relatively low inventory level combined with strong buyer demand has kept this market in favor of home sellers. Altos measures buyer and seller activity using a unique value known as the Market Action Index. From a neutral point of 30, the value can indicate if trends are looking high in favor of sellers or low in favor of buyers. At 37.79, San Diego is very much in the hands of its home owners and homes in the area quite the hot commodity as the MAI has not dipped below a 35 in over a year.
Despite the seller advantage, home prices have remained pretty stable in San Diego. As of September 19, Altos reports the median single-family home value is $641,873.
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