New home sales up, inventory down in LA/Ventura counties

Hot off the press from the BIA of Greater LA/Ventura:

Owing in large part to a combination of FHA financing, low interest rates and the federal tax credit expiring at the end of November, during August new home sales in Los Angeles County were up by 20% over July and by nearly 110% from August of 2008, the Los Angeles/Ventura Chapter of the Building Industry Association (BIA/LAV) reported today.

The monthly BIA-LAV/Hanley Wood Market Intelligence (HWMI) report, analyzed by MetroIntelligence Real Estate Advisors, showed that net sales in Los Angeles County (not including the Antelope Valley) rose to 356 homes in new-home communities of 10 units or more. For the entire state, however, new home sales fell by 13% from a year earlier, pointing to continuing, relative strength in Los Angeles County.

Indeed, since August of 2008, new home sales rose sharply in the San Fernando Valley (838%), the San Gabriel Valley (268%) and in West Los Angeles (121%), but fell moderately in the South Bay/South Central (-33%) and in the Santa Clarita Valley (-20%). Between July and August of 2009, sales rose in all submarkets except for West Los Angeles, where they fell by less than 6%. In neighboring Ventura County, sales remained mostly unchanged between July and August of 2008 at just over 40 homes, although sales have risen by 67% from August of 2008.

“While we’re not out of the woods yet, the market is definitely showing some signs of strength,” said Holly Schroeder, CEO of the BIA chapter. “As long as interest rates stay low and buyers feel confident about their investment in a new home, we hope to continue building on this rebound.”

Another sign of improving fortunes for the homebuilding industry is a sharp reduction in speculative inventory, which declined by over 50% since last August to 1,742 homes in Los Angeles County, or a supply of under five months. In Ventura County, speculative inventory has fallen by an even sharper 62% to 78 homes, which could be gone in just under two months.

“The big story this time is the huge reduction in inventory levels,” said Greg Doyle, Regional Director for Hanley Wood. “Within a few months, we could see builders running out of new inventory for buyers, so those looking for new homes in the region should move quickly.”

The report also shows continuing pricing stability in both counties, with the median asking price in Los Angeles County ranging from $522,000 to $529,000 between June and August of 2009. In Ventura County, the median asking price has ranged from $452,000 to $454,000 during July and August of 2009 but is down from a reported $500,000 in June.