BY LISA FLEISHER - STAR-LEDGER STAFF
New home sales rose sharply in the Northeast in June over May, thanks in part to buyers hoping to move fast enough to take advantage of a federal tax credit. But economists and some builders cautioned this does not mean the industry's troubles are over.
Sales of new homes, which are competing with foreclosures and resale homes, were up 29.2 percent in the Northeast in June over the previous month, with the figures adjusted for seasonal buying patterns, the Commerce Department said yesterday. Nationally, sales increased 11 percent.
It's the highest level of activity since November, but still 11.4 percent down from June of last year.
“We're trying to be optimistic,” said Jason Kaplan, president of Highland Park-based builders Kaplan Companies. “In the short term, everyone keeps asking if we're seeing any positive signs in the market. Unfortunately, on the forsale side, I think it's a little early and we're not seeing any signs.”
It's also the latest encouraging sign from the housing market, which for years has seen nothing but month after month of declines. Sales of already-lived-in homes rose 2.5 percent in the Northeast in June, according to the National Association of Realtors. Also, many areas of New Jersey have seen sharp inventory declines, meaning more competition for fewer homes, according to figures from Otteau Valuation Group.
Still, it's been difficult for the new home market. Building permits in New Jersey are on pace to reach 12,000 this year, the lowest year on record, said Timothy Touhey, chief executive of the New Jersey Builders Association. He cautiously welcomed the uptick in the regional numbers.
“It's sensitive,” he said of the market. “Job growth and continued decline in job loss will be critical to stabilize the market.”
New Jersey's largest builder, K. Hovnanian, did not see a particular surge in June, but instead has seen an uptick overall since March, division president Jim Driscoll said.
The company put several developments on hold, or “mothballed” them, and are focusing on selling out their current communities. What has helped is that inventory is down. For example, K. Hovnanian has 12 potential homes left in the 100-unitcommunityHunter'sBrook in Hackettstown, Driscoll said.
Buyers may be trying to slide in under a Nov. 30 deadline for a first-time homebuyer tax credit of $8,000, which is available to people below certain income levels who have not owned a primary home within the last three years. It's too late now for someone to start building a new home and have it finished and move in by the deadline, Driscoll said.
The credit is helping builders in other ways: It is helping people sell the homes they're living in now so they are free to move into a new home, he said. “I don't think the impact is necessarily as large as it may be in other areas of the country, but it's certainly one more tool,” he said.