New-home sales nationally increased in March after a rough winter for the industry, and the Buffalo Niagara market appears to be sticking to its stable path.
U.S. new-home sales rose 11 percent last month to a seasonally adjusted rate of 300,000 homes, the Commerce Department said Monday. That follows three straight monthly declines. But the pace remains far below the 700,000 homes a year that economists view as healthy.
Homebuilders in Buffalo Niagara said the region never went through the cycle of rapid building followed by a sharp decline that some other parts of the country did. They draw a distinction between the national numbers -- subject to more-pronounced ups and downs -- and what they describe as a more consistent, conservative picture here.
"I think our people are looking forward to a good year," said Joseph McIvor Jr., executive vice president of the Buffalo Niagara Builders Association. "We're not back to where we were [before the recession]."
McIvor said the local market was not hurt by some of the conditions that have afflicted new-home sales at the national level, such as a wave of foreclosed homes in Florida and Arizona.
Such negative factors have forced down home prices elsewhere and stymied new construction, McIvor said. "That just isn't happening here."
Last year in Erie County, 686 permits were taken for single-family homes, compared with 590 in 2009, reflecting an improvement, he said.
John Manns, vice president of sales and marketing for Marrano/Marc Equity, said he thinks stronger consumer confidence would help, but he feels pretty good about the results thus far.
Manns set a goal of 32 signed contracts for new homes from January through March. The total came in just shy of that, at 30.
Traffic at Marrano's eight model locations around the region was down 10 percent from a year ago, but Manns noted that last year during that time, government incentives to purchase homes were driving sales.
"I'm happy with the numbers, I'm happy with the traffic," he said.
Marrano offers a wide range of homes in its portfolio, and Manns said sales of upper-end single-family and patio homes are particularly strong, thanks in part to an improved stock market.
Nationally, last year was the fifth consecutive year of declines for new-home sales. Economists say it could take years before sales return to a healthy pace.
The median price of a new home rose nearly 3 percent from February to $213,800. Prices of new homes are about 34 percent higher than the median price for resales. That's more than twice the markup in healthy housing markets, making older homes a comparative bargain.
Such a disparity is a drag on the economy. New homes represent a fraction of sales, but they have an outsized impact on the broader economy. Each new home creates an average of three jobs for a year and $90,000 in taxes, according to the National Association of Home Builders.
"New housing prices look much less attractive compared [with] cheap existing stock," said Yelena Shulyatyeva, an analyst with BNP Paribas. "As such, new housing demand will likely remain depressed throughout this year and next."
Many builders are waiting for the glut of foreclosures and other distressed properties to be cleared before stepping up construction. But with 1.2 million foreclosures forecast this year nationwide, according to foreclosure tracker RealtyTrac Inc., a turnaround isn't expected for years.
The seasonally adjusted number of new homes for sale in the United States is the fewest since the summer of 1967.
This report contains information from the Associated Press.