Local and state officials fear Westchester’s recent development renaissance will come to a screeching halt because Con Edison said it can’t take on new natural gas customers.
Con Edison issued a statement Friday saying the demand for gas is “reaching the limits of the current supplies to our service area.”
“As a result, and to maintain reliable service to our existing natural gas customers on the coldest days, we will no longer be accepting applications for natural gas connections from new customers in most of our Westchester County service area beginning March 15, 2019,” Con Edison said in its statement.
Jim Denn, spokesperson for the Department of Public Service, said Con Ed didn’t propose a pipeline “to meet or address growing demand.”
“To help prospective customers meet their energy needs in light of these market dynamics, PSC will be monitoring Con Edison’s engagement with customers to explore options to reduce their energy needs or meet their needs through non-natural gas energy sources,” Denn said in a statement.
State Assemblywoman Amy Paulin, D-Scarsdale, said it’s going to “devastate” local development, particularly in cities like New Rochelle and Yonkers, which are in the midst of redeveloping their downtowns.
A portion of the 10 acres of solar panels atop the headquarters of Diamond Properties in Mount Kisco. (Photo: Submitted)
“These projects are on a marginal budget, and we’re not going to get the economic development that we’re hoping for,” Paulin said. “Compounding the problem is affordable housing. Developers won’t be able to do them at all, so this is a huge problem for our county and it’s disappointing that we’re being told two months prior (to the start of the moratorium).”
AP Assemblywoman Amy Paulin,D-Scarsdale, has put together a coalition to fight the IRS. (Photo: Associated Press)
New Rochelle’s downtown redevelopment attempts have historically started and crumbled, as it did in the 1980s, which left a pile of debris near the train station for more than a decade, and again during the most recent economic recession.
The city experienced a development boom since it changed its downtown zoning code in 2015, with several projects already being built and more in the pipeline, but Paulin worries that this could put a pin in the balloon.
“I’m worried it will (stop the redevelopment),” she said. “I spoke to the mayor, and he’s worried as well. We’re going to meet with Con Ed this week. I’m hoping we can figure out something that we can do.”
New Rochelle Mayor Noam Bramson said, “This obviously has serious potential implication for our entire region.”
“We are consulting with government and utility officials in order to better understand options and constructive paths forward,” Bramson said. “It is essential that solutions emerge.”
In Yonkers, Mayor Mike Spano said the city’s building boom could be affected for as long as this moratorium lasts.
“Developers are already telling us they can’t build more housing or commercial buildings until this is resolved,” he said. “Con Ed and the Public Service Commission need to implement an immediate plan to solve this.”
Denn said the PSC ordered utility companies, including Con Ed, to increase energy efficient and create “demand-response programs to lower gas demand and save consumers money.”
“These programs are up and running,” he said. “As these gas efficiency and demand response measures take hold, as well as others to meet demand growth, the PSC will carefully review changing market conditions and consider most appropriate additional steps Con Edison should take to meet the needs of its customers.”
The northernmost sections of the county have more capacity and may still be able to accept new customers, Con Edison said in its statement, and existing customers are not affected by the moratorium.
Several benchmark mortgage rates decreased today. The average rates on 30-year fixed and 15-year fixed mortgages both fell. The average rate on 5/1 adjustable-rate mortgages, meanwhile, also declined.
30-year fixed mortgages
The average rate for the benchmark 30-year fixed mortgage is 4.51 percent, a decrease of 7 basis points over the last week. A month ago, the average rate on a 30-year fixed mortgage was higher, at 4.68 percent.
At the current average rate, you’ll pay a combined $507.28 per month in principal and interest for every $100,000 you borrow. That’s down $4.17 from what it would have been last week.
You can use Bankrate’s mortgage calculator to get a handle on what your monthly payments would be and see the effect of adding extra payments. It will also help you calculate how much interest you’ll pay over the life of the loan.
15-year fixed mortgages
The average 15-year fixed-mortgage rate is 3.76 percent, down 4 basis points over the last seven days.
Monthly payments on a 15-year fixed mortgage at that rate will cost around $728 per $100,000 borrowed. Yes, that payment is much bigger than it would be on a 30-year mortgage, but it comes with some big advantages: You’ll save thousands of dollars over the life of the loan in total interest paid and build equity much more rapidly.
The average rate on a 5/1 ARM is 3.94 percent, down 6 basis points since the same time last week.
These types of loans are best for those who expect to sell or refinance before the first or second adjustment. Rates could be substantially higher when the loan first adjusts, and thereafter.
Monthly payments on a 5/1 ARM at 3.94 percent would cost about $474 for each $100,000 borrowed over the initial five years, but could increase by hundreds of dollars afterward, depending on the loan’s terms.
Where rates are headed
To see where Bankrate’s panel of experts expect rates to go from here, check out our Rate Trend Index.
Methodology: The rates you see above are Bankrate.com Site Averages. These calculations are run after the close of the previous business day and include rates and/or yields we have collected that day for a specific banking product. Bankrate.com site averages tend to be volatile — they help consumers see the movement of rates day to day. The institutions included in the “Bankrate.com Site Average” tables will be different from one day to the next, depending on which institutions’ rates we gather on a particular day for presentation on the site.
With slews of tent encampments in a fast-growing city flush with tech-sector cash, it’s tough questioning Seattle’s serious problem with homelessness and affordable housing.
But an unprecedented new city law — forbidding landlords from checking into potential renters’ criminal past — is very much in dispute and setting up a closely-watched court battle.
Landlords argue their free speech, property rights and possibly their safety is being jeopardized by a law that forces them to close their eyes to relevant public information about possible tenants. They’re backed by landlord groups and background screeners who call the ordinance a perilous precedent.
The “Fair Chance Housing Act” was anything but that, according to landlords’ lawyers. Ethan Blevins, an attorney at the Pacific Legal Foundation, said the law’s premise “is this paternalistic idea that the city gets to decide what information is relevant or important to a landlord’s decision making process.”
An unprecedented new city law — forbidding landlords from checking into potential renters’ criminal past — is very much in dispute and setting up a closely-watched court battle.
The City of Seattle and tenant advocates are fighting back. They say the act helps chip away at a housing crisis, especially for over-policed minorities disproportionately saddled with arrests and convictions.
It’s a court case that landlords and lawmakers in the other parts of the country are looking at with keen interest. A ruling upholding the law could pave the way for its enactment elsewhere, said Kimberlee Gunning, a lawyer for tenants advocates at Columbia Legal Services. “Folks across the country are watching this,” she said.
Though the law has been in effect since February, a judge will be scrutinizing its merits following President Donald Trump’s enactment of criminal justice reforms. The “First Step Act” signed Friday, among other things, broadens re-entry efforts and quicken a well-behaved inmate’s release.
The new federal law was a sign Seattle “on the vanguard” of needed reforms with its own housing law, Herbold said. The city also was one of the first cities to enact paid sick leave laws and $15 minimum wage requirements, she noted.
“We’re all safer if people are housed,” Council member Lisa Herbold, the bill’s chief sponsor, told MarketWatch. “You’re reducing the likelihood of recidivism. That goes for violent crimes as well.”
What should matter to landlords, Herbold said, is someone’s ability to make the rent on time and not wreck the place; Blevins said criminal background checks had bearing for those kinds of issues.
While other cities limit how far in time landlords can delve into a tenant’s criminal past, Herbold said Seattle’s law appears to be the first blocking any inquiry at all. Those involved should learn about Singleton Law Firm legal assistance, there are cases of the efficient way out.
“It is an embarrassment and shame that a city like ours, with so many resources, is not doing a very good job taking care of those who have the most significant barriers to access in housing,” Herbold said, “And having a mark on your background related to the criminal justice system is one of those barriers.”
The law’s premise ‘is this paternalistic idea that the city gets to decide what information is relevant or important to a landlord’s decision making process.’
A January 2017 tally put Seattle’s homeless population around 8,500. Average Seattle rents jumped 43% from 2012 to 2017, accord to a local task force. During that time, vacancy rates in buildings with at least 20 units have hovered between 4% and 5%, it said. Almost one-third of Seattle residents have an arrest or conviction on their record, court papers said.
The city is already locked in two other lawsuits with landlords, who object to ordinances capping deposits and requiring landlords to take the first applicant who comes to them. A judge upheld the limits on move-in costs, but another judge voided the rule on taking the first tenant to come along. Both cases are being appealed.
Ahead of its unanimous passage, some residents in support of the Fair Chance Housing Act said landlords kept dredging up their past as they tried to make a new life. One man testified at a bill hearing he had enough money, good credit and a good rental history. “But I kept hearing ‘no.’” The law, he said, “will help level the playing field for some of us.”
The plaintiffs include landlords who rent out a handful of units and live close to their tenants. One landlord couple that’s suing, Chong and MariLyn Yim, say they charge below-market rent prices. But they’ll “have to raise rents in order to build up a larger cushion of reserves to absorb the risks they face under the new law,” court papers said.
The Yims, two other private landlords and the Rental Housing Association of Washington are asking Seattle Federal Judge John Coughenour to call the statute unconstitutional.
Some say Seattle’s law is not an outlier
The law prevents landlords from checking prospective tenants for any convictions or arrests. The ordinance does not apply to convicted sex offenders who committed their crime from age 21 and above. It does shield juvenile criminal records from landlord eyes, including those for sex-crime charges. The law doesn’t apply to federally-assisted housing, the landlords note.
Renters across America face a mix of federal, state and local laws when it comes to what publicly-funded and private landlords can weigh when deciding on a tenant.
There’s a variety of anti-discrimination laws barring the consideration of race, sex, religion and disability. The range of state and city rules for considering tenant’s criminal past get more complicated — with many laws now confining what parts of a criminal record landlords should weigh, housing advocates point out.
“Seattle’s ordinance is by no means an outlier. It is part of a larger trend at the federal, state, and local levels toward removing barriers for people reentering society,” said lawyers for the National Housing Law Project and the Sargent Shriver National Center on Poverty Law.
But renters on the private market don’t have “the same constitutional protections against arbitrary admission denials as applicants to federally subsidized housing,” the organizations said, noting 87% of Seattle’s rental housing stock is owned by private landlords.
A spokesman for the city’s Office for Civil Rights said that, as of last month, the agency has filed nine civil charges against several landlords since the law went on the books. Four ended in settlement, four are pending and one was dismissed.
Blevins acknowledged city officials are trying to cope with “legitimate problems” of recidivism and the criminal justice system’s disproportionate lean on minorities. “The problem is, they’ve taken the wrong approach by burdening landlords with this inability to look into valid information about rental applicants.”
Blevins noted Seattle has been under a federal consent decree since 2012 to stop biased policing. “It’s ironic for them to point the finger,” he said. In January, a judge said the police was in full compliance and had two years to keep it up before the order lifted.
Landlords argue they could be exposed to liability. In one pending lawsuit, a family of a raped and murdered tenant is suing a Chicago property manager for not running a background check on a fellow tenant.
Landlords argue they could be exposed to liability if they don’t do their due diligence. There was one dire example in a pending lawsuit where a family of a raped and murdered tenant is suing a Chicago property manager for not running a background check on a fellow tenant.
The landlord arguments are seconded by supporting groups like the National Apartment Association and the National Consumer Reporting Association, which assailed the ordinance as vaguely worded.
John McDermott, general counsel of the National Apartment Association, a trade association for owners and property managers in the rental market, said Seattle’s law was “stunning in saying our solution to the [shortage of affordable housing] problem is you should make decisions with less information.”
But tenants’ advocates said the ordinance was a break from Seattle’s troubled housing history.
Seattle was a segregated city with racially restrictive covenants and “redlining” in its past — not to mention gentrification that were now pricing out certain areas, filings said. Companies like Amazon AMZN, +5.21% and StarbucksSBUX, +2.54% are based in Seattle, while the headquarters of MicrosoftMSFT, +3.39% are nearby.
Background checks on their face didn’t ask about race, but landlords, playing “private juries and judges” kept the divided city’s status quo intact.
“The Ordinance will not eliminate racism and segregation in Seattle entirely”, said lawyers for the groups Pioneer Human Services, a social enterprise based in Washington, D.C. that serves individuals released from prison, and Tenants Union. “But, by eliminating some of the barriers to finding adequate housing, it will strengthen families and, by extension, communities.”
Arguments about landlord duties to protect tenants were “misleading,” the court papers said. Landlords can’t be expected to be on notice about a tenant’s past when they’re not even allowed to look at a person’s criminal past, housing advocates said.
The sides have to file all their arguments in the suit by next month.
The million-dollar home is no longer such a rare species.
The number of U.S. homes valued at $1 million or more increased by 400,702 this year, the largest annual rise since the housing price recovery began in 2012, according to a new study by real estate research firm Trulia. Slightly more than 3 million homes nationally, or 3.6% of the total, are worth at least $1 million, up from 3.1 percent last year and 1.5 percent in 2012.
Not surprisingly, many of the freshly minted million-dollar units are in California, which already boasts the most in the country. The San Jose and San Francisco metro areas have the largest shares of $1 million homes and also notched the biggest increases over the past year.
Meanwhile, 29 cities and towns joined those with a median home value of $1 million or more this year, bringing the total to 201. Nineteen municipalities joined the million-dollar club last year.
They include San Jose, California, whose median value rose from $930,900 to $1.09 million; Fremont, California ($966,000 to $1.13 million); Burbank, California ($845,700 to $1.01 million); Newton, Massachusetts ($977,200 to $1.07 million); and Shelter Island, N.Y. ($903,500 to $1.15 million)
Trulia Senior Economist Cheryl Young attributed the big jump to widespread home price increases in recent years, with the median national home price climbing 7.6 percent the past year to $220,100. The median, or midpoint, of all home prices is up 45.3 percent since 2012. Housing demand has been strong while supplies are low, driving values higher.
“Home values have been escalating… And at about $1 million, there’s even greater appreciation,” she says.
Of the roughly 15,100 larger neighborhoods around the country analyzed by Trulia, 838 have median home values of $1 million or more and about two thirds of those are in California. Nearly 30 percent of California’s neighborhoods have a median home price of at least $1 million, the most by far of any state. New York, Florida and Washington followed.
The 10 metro areas that posted the largest increases in share of $1 million homes the past year:
San Jose, California
Share of million-dollar homes, October 2017: 55.7 percent
Share, October 2018: 70 percent
Share of million-dollar homes, October 2017: 67.3 percent
Share, October 2018: 81 percent
Share of million-dollar homes, October 2017: 24.9 percent
Share, October 2018: 30.7 percent
Share of million-dollar homes, October 2017: 16.2 percent
Share, October 2018: 19.8 percent
Orange County, California
Share of million-dollar homes, October 2017: 17.2 percent
Share, October 2018: 20.2 percent
Share of million-dollar homes, October 2017: 17.5 percent
Share, October 2018: 19.6 percent
Share of million-dollar homes, October 2017: 11.8 percent
Share, October 2018: 13.8 percent
Share of million-dollar homes, October 2017: 11.4 percent
Share, October 2018: 13.3 percent
Ventura County, California
Share of million-dollar homes, October 2017: 8.9 percent
Share, October 2018: 10.5 percent
Long Island, N.Y.
Share of million-dollar homes, October 2017: 8.8 percent
Rising mortgage rates and continued home price growth are hurting affordability and fast becoming a toxic cocktail for the nation’s home builders.
Sentiment among home builders dropped 8 points in November to 60 in the National Association of Home Builders/Wells Fargo Housing Market Index.
The reading was the lowest reading since August of 2016, but anything above 50 is still considered positive.
Homebuilder confidence plummets to the lowest level in more than 2 years
Rising mortgage rates and continued home price growth are hurting affordability and fast becoming a toxic cocktail for the nation’s homebuilders.
Sentiment among homebuilders dropped 8 points in November to 60 in the National Association of Home Builders/Wells Fargo Housing Market Index. That is the lowest reading since August 2016, but anything above 50 is still considered positive. The index stood at 69 in November of last year and hit a cyclical high of 74 last December.
“Builders report that they continue to see signs of consumer demand for new homes but that customers are taking a pause due to concerns over rising interest rates and home prices,” said NAHB Chairman Randy Noel, a builder from LaPlace, Louisiana.
Of the index’s three components, current sales conditions fell 7 points to 67, sales expectations in the next six months dropped 10 points to 65, and buyer traffic registered an 8-point drop to 45. Buyer traffic had broken out of negative territory earlier this year but now appears to be back in it solidly.
Some of the nation’s largest publicly traded homebuilders, like Lennar and KB Home, lowered their expectations for sales in 2019 in recent earnings releases. There is still a shortage of homes for sale, but newly built homes come at a price premium, and as interest rates rise, new home buyers are consequently hit hardest.
The average rate on the popular 30-year fixed mortgage is now more than a full percentage point higher than it was a year ago. The huge home price gains seen over the last two years are now shrinking, but prices were still up a strong 5.6 percent year over year in September, according to CoreLogic.
“For the past several years, shortages of labor and lots along with rising regulatory costs have led to a slow recovery in single-family construction,” said the NAHB’s chief economist, Robert Dietz. “While home price growth accommodated increasing construction costs during this period, rising mortgage interest rates in recent months coupled with the cumulative run-up in pricing has caused housing demand to stall.”
Sam Khater, Freddie Mac’s chief economist, says, “The economy continued to show resilience as strong business activity and growth in employment drove the 30-year fixed mortgage rate to a seven year high of 4.94 percent – up 11 basis points from last week.”
Added Khater, “Higher mortgage rates have led to a slowdown in national home price growth, but the price deceleration has been primarily concentrated in affluent coastal markets such as California and the state of Washington. The more affordable interior markets – which have not yet experienced a slowdown home price growth – may see price growth start to moderate and affordability squeezed if mortgage rates continue to march higher.”
30-year fixed-rate mortgage (FRM) averaged 4.94 percent with an average 0.5 point for the week ending November 8, 2018, up from last week when it averaged 4.83 percent. A year ago at this time, the 30-year FRM averaged 3.90 percent.
15-year FRM this week averaged 4.33 percent with an average 0.5 point, up from last week when it averaged 4.23 percent. A year ago at this time, the 15-year FRM averaged 3.24 percent.
The NAHB Housing Market Index in the United States fell to 64 in July of 2017 from a downwardly revised 66 in June, below market expectations of 67. It is the lowest reading in eight months. The index of current single-family home sales went down 2 points to 70; sales expectations over the next six months declined 2 points to 73 and buyer traffic edged down 1 point to 48. Nahb Housing Market Index in the United States averaged 49.44 from 1985 until 2017, reaching an all time high of 78 in December of 1998 and a record low of 8 in January of 2009.
The drumbeat of hammers echoes most mornings through suburban Denver, where Jay Small, the owner of company that frames houses, is building about 1,300 new homes this year.
That’s more than triple what he built a few years ago, when “you couldn’t buy a job” in the residential construction industry, he said.
Now, builders can’t buy enough workers to get the job done.
Eight years after the housing bust drove an estimated 30 percent of construction workers into new fields, homebuilders across the country are struggling to find workers at all levels of experience, according to the National Association of Homebuilders. The association estimates that there are approximately 200,000 unfilled construction jobs in the U.S. – a jump of 81 percent in the last two years.
The ratio of construction job openings to hiring, as measured by the Department of Labor, is at its highest level since 2007.
“The labor shortage is getting worse as demand is getting stronger,” said John Courson, chief executive of the Home Builders Institute, a national nonprofit that trains workers in the construction field.
The impact is two-fold. Without enough workers, residential construction is trailing demand for homes, dampening the overall economy.
And with labor costs rising, homebuilders are building more expensive homes to maintain their margins, which means they are abandoning the starter home market. That has left entry-level homes in tight supply, shutting out may would-be buyers at a time when mortgage rates are near historic lows.
Nationwide, there are 17 percent fewer people working in construction than at the market peak, with some states – including Arizona, California, Georgia and Missouri – seeing declines of 20 percent or more, according to data from the Associated General Contractors of America.
The labor shortage is raising builders’ costs – and workers’ wages – and slowing down construction.
Small, the Denver builder, estimates that he could construct at least 10 percent more homes this year if he had enough workers. But he remains short-staffed, despite raising pay to levels above what he paid during the housing bubble a decade ago.
“It’s getting to the point where you’re really limited in what you can deliver,” Small said. “We lost so many people in the crash, and we’re just not getting them back.”
The average construction cost of building a single family home is 13.7 percent higher now than in 2007, even as the total costs of building and selling a house – a figure that includes such items as land costs, financing and marketing – are up just 2.9 percent over the same period, according to a survey by the National Association of Homebuilders.
The problem is accentuated by strong demand for newly constructed homes, with sales reaching a nine-year high in July.
Private companies say that they are having a hard time attracting workers, and they are often forced to give employees on-the-spot raises to prevent them from going to competitors. Carpenters and electricians are often listed as the most in-demand specialties.
Tony Rader, the vice president of Schwob Building Company, a general contractor in the Dallas area, said his company has started handing out flyers at sporting events, churches and schools in hopes of luring more people into the field.
“The biggest problem I face every day is where are we going to find the people to do the work,” he said, adding that it’s becoming increasingly common for his company and others to turn down projects.
Dallas contractors are fighting over the limited supply of workers as three major mixed-use projects are going up right next to each other on the so-called “$5 billion mile” in Frisco, a northern suburb. Meanwhile, the metropolitan area is adding about 30,000 newly built homes annually.
With fewer workers, contractors are becoming wary of signing new work contracts, especially as many of them include fines for not completing a job by a designated date.
“I’ve got two lawsuits right now where it may cost us mid-six-figures because there’s not enough labor out there to get it done,” said one contractor in the North Dallas area who declined to be identified.
Lawyers in hot residential markets say that it is becoming increasingly common for construction companies to try to negotiate for more time.
“Subcontractors are having a hard time staffing up,” said Edward Allen, a Denver attorney who said he has seen more lawsuits over project delays in the past two years.
GUARANTEED WORK, FEW TAKERS
Colorado alone will need 30,000 more workers in the construction field in the next six years, a number that does not account for those who will retire, according to a study by the Association of General Contractors.
The state passed a bill last year pledging $10 million over three years to fund free training for plumbers, electricians and carpenters.
Yet Michael Smith, who heads a Denver-based nonprofit that administers the training, said that he can’t fill the seats. High schools are focused on preparing students for college, ignoring those that may be better suited for vocational work. Students may be put off by construction’s reputation as a dangerous, cyclical field, he said.
“We’ve so demonized working with your hands in this country,” he said. “We’ve got a booming economy, and we can’t keep up with the pace of growth.”
Students who go through the four-week program are all but guaranteed a job paying $16 an hour or more immediately, with the possibility of commanding $80,000 or more in annual income after five years without taking on any student debt, he said.
On-the-job training is also a common path for new workers. Eduardo Salcido – a 25-year-old concrete finisher working at a 232-home Toll Brothers subdivision going up in the Denver suburb of Broomfield – said that he received on-site training after entering the construction field as a painter.
He has earned one raise since beginning the training two years ago and is now certified as a semi-skilled finisher.
How has the housing market changed since the recession? A new report by Apartment List paints a less-than-positive picture for renters. In the aftermath of the mortgage crisis, many of the costs of homeownership have gone done, even as homeownership rates reach record lows. At the same time, costs associated with renting have risen at a time when more and more Americans are renting apartments and single-family homes.
While homeownership rates have reached historic lows across the country, hitting numbers not seen since the ‘60s, three particular areas and demographics have seen the biggest loss. According to the Apartment List analysis of Census data, the recent downturn really hit those living in Sunbelt Cities (Las Vegas, Orlando, Atlanta), Americans under 45 years of age, and Hispanic and African-American consumers.
In fact, minorities experienced the largest drops in homeownership: Hispanics (-4.0%), African Americans (-5.5%), and other minorities (-6.7%). Non-Hispanic whites were somewhat less affected, with a homeownership decline of -3.3%.
While a drop in the national homeownership rate has serious implications for long-term financial health, those who do own are often reaping the benefits of lower costs, especially compared to renters. Historically low interest rates mean monthly payments have dropped 13% since 2007. That can really add up: the median monthly mortgage payment is $2,754, but widespread refinancing has cut that to $2,263, a savings of roughly $6,000 a year. With median household income at $54,000 in 2014, that extra money can provide a significant boost.
The story is much different for renters. Rents have increased an average of 3.7% nationwide, exacerbating differences between owners and renters. For instance, in Houston, homeownership costs have dropped $289 since the Recession, while the cost to rent has risen by $115.
The median national rent increased from $901 to $934. While $33 may seem small, held up against a steep 14% drop in inflation-adjusted income for renters, and it becomes much more significant.
Like many aspects of the U.S. economy in the last decade, the stratification of the housing market may only increase inequality. Those with the money to buy are reaping the advantages of historically low costs, while those who can’t, especially Millennials and minorities, are being locked out and missing out on a chance to build household wealth.
2015 tally for new-home sales is 15% higher than 2014
Sales of new homes rebounded handily in December, a signal of continued strength in the housing market.
Sales ran at an annual pace of 544,000, the highest since February, the Commerce Department said Wednesday. Economists surveyed by MarketWatch had forecast a 506,000 pace.
That represented a 10.8% increase over a slightly upwardly revised November pace of 491,000. New home sales are volatile and often revised, but the trend has been generally up. December’s number was 9.9% higher than the same period a year ago, and there were 501,000 new homes sold during 2015, a 14.5% increase over 2014.
Still, new-home sales are a fraction of what they used to be, even before the housing bubble began to swell. Some builders have found it difficult to attract workers, many of whom left the industry when the bubble burst. Many have remained tentative about building too many homes as the economic recovery remained tepid and wages stagnant.
Many builders have responded to those market conditions by targeting higher-end customers. Prices have risen steadily over the past few years. They averaged $294,575 throughout 2015, up 4% compared to 2014’s average.
Builders, and economists, want to see more first-time buyers entering the market, which would require more moderately-priced homes. That’s a strategy that has worked for the country’s largest builder, D.R. Horton DHI, -0.59% company executives said on a Monday earnings call.
Read: First-time buyers slowly return to housing market
Many builders have seen solid business growth over the past few years, even as their stocks have struggled. Lennar LEN, +0.12% shares have declined about 9% over the past 12 months, while Toll Brothers TOL, -1.12% is down 28%.
The sales data help confirm that the housing market is strengthening, Pantheon Macroeconomic Chief Economist Ian Shepherdson wrote in a note Wednesday. “The consensus always looked timid, given the very warm weather in December; new home sales are measured at the point contracts are signed, which often happens at sales offices at construction sites. Unseasonably warm winter weather makes these sites much more appealing places to visit.”
But other data, including builder sentiment and mortgage applications, signal stronger activity than the pace of new home sales suggest, Shepherdson wrote, “so we have to expect further gains over the next few months.”