Financing May Be the Roadblock to Recovery

The National Association of Home Builder (NAHB) reports sales of newly built, single-family homes increased 5.5 percent to a seasonally adjusted annual rate of 290,000 units in November. Based on Commerce Department figures, the gain represents a partial bounce-back from a near-record low, downwardly revised number of new-home sales in October. “While builders continue to face a great deal of competition from short-sale and foreclosure properties, the improvement registered in new-home sales in November is a good sign,” said Bob Jones, chairman of the NAHB. “With consumer interest in new homes expected to continue to revive as the economy and job markets improve, and inventories of new homes for sale near record lows, our concern now is that a lack of construction financing will keep builders from being able to expand the selection of what they have to offer buyers heading into the spring.” NAHB Chief Economist David Crowe adds that unless builders’ access to financing for new development improves, many will not have a product to sell when the opportunity arises, which in turn would slow a market recovery. Manufactured home builders may be able to provide some of the needed supply.
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