The available supply of foreclosures and short sales previously stunted the recovery for new home sales, according to CoreLogic’s May MarketPulse report.
Though, now that the supply of distressed homes and existing-homes for sale has fallen, there’s more room for the new home sales market to expand.
According to CoreLogic, the number of seriously delinquent mortgages (90-plus delinquencies, including foreclosures and REOs), peaked at 3.7 million in January 2010, but has fallen by 1.2 million, or by 33 percent.
As delinquencies decline, new home sales are rebounding after hitting low points over recent years. Citing data from the Census Bureau, CoreLogic reported new home sales have increased 19 percent from a year ago in March.
Improvements in the new home sales market also benefits the economy in several ways since new homes require the acquisition and development of new land, the purchase of supplies, and the need for labor.
According to the report, every new home requires five full-time jobs for 12 months.
Most new home sales are also concentrated in hard-hit suburban metro areas, which bring an economic stimulus to areas devastated by the housing recession.
After observing year-over-year growth in new home sales growth for March, CoreLogic found a concentration of growth in the West. The data provider revealed six of the top 10 markets are located West, and the top three-Oakland, Bakersfield, and San Francisco—are in California.
Oakland and Bakersfield, in particular, have experienced a significant decrease in the supply of distressed homes for sale over the last year, with REO sales in March of this year dropping to about one-third the level seen last year, Corelogic reported.
The decline in distressed sales is not the only factor driving growth in new home sales. According to CoreLogic, San Francisco and Salt Lake City, which ranked No. 4 for its increase in new home sales, both experienced a rebound in new home sales due to economic improvements.
Over the last year in March, both markets have seen their employment bases grow by at least 3.5 percent, which is more than twice the national rate, CoreLogic stated