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Rise in new-home sales bolsters sense of housing revival

Courtesy of Allison Cramer

Jacy Painter Kelly and her son, Painter, 5, cement handprints at their new home near Charlotte, N.C.

While lugging 40 new cabinets into their nearly built home Wednesday, the Kelly family will gleefully stack another layer of chaos onto the saw-and-sales frenzy buzzing through their suburban Charlotte subdivision.

“It is a crazy-bizarre scene," said Jacy Painter Kelly, who will move into her new, four-bedroom house in Baxter Village in August along with her two young kids and husband. "Sales are insane. And the Goodyear store across the street gets a lot of business from all the nails in (residents’) tires.” 

The bustle at Baxter Village is part of a quickening home-construction pulse across the nation: New-home sales edged up 3.3 percent from March to April to a seasonally adjusted 343,000-unit annual pace after a 332,000-unit rate in March, the Commerce Department reported Wednesday.

That is a far cry from the 1.3 million sold at the height of the housing boom in 2005, but still represents the latest sign the battered housing market has regained a semblance of normality.

The median price of a new home sold hit $235,700 last month, up 4.9 percent from April 2011, according to Commerce statistics. A separate report Wednesday from the Federal Housing Finance Agency showed home prices also gained 1.8 percent in March after pushing 0.3 percent higher in February.

When blended with Tuesday’s report from the National Association of Realtors that existing-home sales touched a two-year high in April, analysts say evidence of a modest real estate revival seems to be mounting. 

Courtesy of Kevin Kelly

Painter Kelly, 5, vacuums construction dust at his family's new home near Charlotte, N.C.

“Things are looking good,” said Pat Newport, an economist with IHS Global Insight. “These are still very low numbers by historical standards. But when combined with the NAR report, this tells us that something is going on. Prices are stabilizing after adjusting for inflation.

“It’s hard to get a good picture of the housing market early in the year because (warming) weather can distort the numbers. But I think the picture emerging is a good one. The housing market is getting better,” Newport added. “We had a very good first quarter, and the numbers are telling us it was more than just good weather helping the market.”

Amid Wednesday’s fresh data dump, Newport called the FHFA release “the really good news” because “it showed prices are increasing pretty much across the board, in all nine census divisions.”

Newly built homes represent less than 20 percent of the U.S. housing market, but they place a far larger footprint on the overall economy. Each home built creates an average of three jobs per year and produces about $90,000 in tax revenue, according to the National Association of Home Builders.

The 3.3 percent rise in new home sales “is line with our expectations for a continued, modest increase in home sales as buyers gain confidence in the economy and their jobs,” said David Crowe, chief economist with the NAHB.

TODAY real estate contributor Barbara Corcoran gives a peek inside five family-sized homes including a mountain oasis with covered porch in Boise, Idaho, a 1905 neoclassic home in Wilmington, Delaware with gleaming hardwood floors and a tropical retreat in Port St. Lucie, Florida.

For the Kelly family, building made more budget sense than purchasing an existing home. They needed extra cash on hand and an opportunity to create a unique space to accommodate Jacy Painter Kelley’s in-home, kitchen-goods business, lucylucybangbang. She makes hanging dishtowels. From her work station, she needs to be able to keep track of her two children, ages 5 and 2.

“We looked at existing homes. They just weren’t what we wanted. With my business growing quickly, I need a place in the home where I’m really central to everything,” Kelly said.

“When you buy a previously owned house, you have to put a lot of cash down. You don’t have a lot left to make your home exactly what we needed. By building, you still have to put cash down but you can design just what you want it to be,” she added. “I don’t want to be tucked away by myself and I don’t want to be working in the dining room.”