New Construction Home Sales!

New Construction Home Sales

2006 was a good year for new construction in Birmingham, Alabama.  In a year that played host to national wonder and speculation on when the real estate bubble would burst, Birmingham, Alabama witnessed an increase in new construction home sales in 2006, up from those of 2005.

Home shoppers are benefiting from the large volume of new home developments currently under construction throughout the Birmingham metropolitan area.  This sheer number of new homes, combined with a vast selection of styles, amenities, and locations, drove new construction home sales in Birmingham to new heights! 

So what can we expect from 2007?  Let's explore a simple indicator that we can use to make a forecast for 2007. 

One simple indicator to use as a basis for forecasting the future in new home sales is to examine the number of new construction homes sold for a specific period of time.  Then compare those numbers from those of new construction homes sold during the same time period from the previous year.  If the number from 2007 is larger, other determining factors remaining constant, then it can be predicted with a reasonable amount of accuracy that new construction home sales will increase in 2007.

For example, In January of 2006, a total of 381 new or under construction homes were sold.  Compare that with January of 2005's 361, and you will see that there was an increase in 2006.  So, as the theory goes, it should hold true for the entire year.  Now, let's see what happens if you take the whole year of 2006 and compare it to 2005.  As we theorized, you will note an increase of 342 new or under construction homes were sold, amounting to a 6% increase during 2006.

But what about the numbers for 2007?

 In looking at the same criteria for January of 2007, we discovered a net of 320 new or under construction homes sold.  This amounts to about a 16% decrease.  Cause for alarm for area home builders?  Not necessarily, at least not yet.  Although, on the flip side, savvy home buyers are excited about the prospect of using this simple fact to negotiate home sale prices in their favor.

As we move into the traditional busy time in Birmingham real estate, it will be interesting to see how buyers and sellers maneuver and negotiate.  Will builders stay firm on prices or will buyers be able to knock $1000s off the price and walk away with a deal?  How will the drop in sales play out over the entire year?  Whatever happens, it will be exciting to watch it play itself out!

• Birmingham New Construction

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