The Christy Allen Team

Charlotte home sales manage another gain; weakness ahead?

The Charlotte-area housing market eked out another sales gain in February, despite a dreary economy and nasty weather, and there are signs the upward trend could continue.

 

However, a leading indicator from a Charlotte research firm points to continued weakness for new home construction.

 

The number of houses, townhouses and condos sold last month rose 3.6 percent from a year ago during the deepest part of the slump, according to results released today by the Charlotte Regional Realtor Association. February marked the fifth month of sales gains, although the increase was well below the double-digit jumps last fall.

 

Recent gains still leave sales below the levels of at least 2003, before the boom.

 

Prices also continued moving up, with the average sales price of $191,288 rising 4.6 percent from a year ago, when the area saw its steepest declines. That marked the fourth consecutive month of gains for transactions through the association’s Carolina Multiple Listing Services.

 

Home sales are typically strongest during the spring, as families aim to move and get settled before children start a new school year. Home buyer tax credits of as much as $8,000 are set to expire April 30, another potential boost to the spring selling season. But there are conflicting signals, as high unemployment sidelines buyers and loads of foreclosures weigh on prices in the Charlotte area and nationwide.

 

On the upside, the number of pending MLS contracts jumped 14 percent from a year ago. Those contracts, representing signed deals that haven’t yet closed, are a sign of rising demand. February’s pending contracts also reached their highest level since October. At that time, buyers were rushing to take advantage of the tax credit, which had been scheduled to expire Nov. 30 but was later extended and expanded.

 

MLS transactions account for the vast majority of the area’s home sales, but the reporting doesn’t distinguish between sales of new and existing homes.

 

Other recent housing data show the area’s sales gains have been driven solely by existing homes, many of them heavily discounted foreclosures or houses that have languished on the market. That inventory means stiff competition for new homes.

 

Data from a Charlotte firm that tracks lumber sales could foreshadow a weak spring for the nation’s homebuilders. Orders and shipments of southern yellow pine used to frame new homes have been dropping sharply for the last four weeks, according to Forest2Market.

 

The Charlotte firm tracks what amounts to about 55 percent of U.S. deals for the lumber. The company doesn’t break out local results, but executives routinely talk with lumber mills and buyers in many regions, so they have a good inside view of industry thinking.

 

During January, sales jumped, likely driven at least in part by optimism that the tax credits would fuel sales, and improved economic reports.

 

“Homebuilders thought they were going to sell some houses in the next four months because the economy looked like it was turning around,” said Pete Stewart, president of Forest2Market. “They took on orders to make sure they were ready for that build up, but it never came.”

 

Blizzards, heavy rain and unusually cold weather in many areas contributed to the construction weakness, said Daniel Stuber, the firm’s operations manager. But the biggest weight on the industry is the weak economy and existing homes, often with prices slashed.

 

About one-third of the yellow pine is used for home building, and the rest is made into treated lumber, used for decks and other outside or high-moisture applications and to deter termites. So the drop off in shipments means two things, Stewart said: “Homebuilders are not building new homes, and…the remodeling, outdoor decking market is very soft.”

Posted at 02:45PM Mar 11, 2010 by Christy Allen in General  |  Comments[0]