Thursday, September 19, 2002

New home sales
continue to build

The shrinking number
of resales is helping to boost
listing prices above $350,000

By Lyn Danninger

The number of sales contracts signed for new homes nearly doubled in July, helped along in part by shrinking resale inventory and continued attractive mortgage rates.

A total of 285 contracts were signed in July, up 94 percent from the same period last year. List prices also continued their upward swing, with buyers paying an average of $353,000 in July for a new home, an increase of 32 percent from the same month last year.

Real estate analyst Ricky Cassiday said it's no surprise buyers are flocking to new homes.

"The value proposition that new homes offer the market is many times superior to what prospective buyers are now encountering in the home resale market. Listings are extremely low, median prices are up, so it's no surprise new home sales are doing so well," he said.

Cassiday said he believes demand for new homes will continue even though the traditionally strong summer sales period is almost over.

"Demand slows slightly in fall and winter months, but there is still no reason why new homes won't continue to sell well," he said.

Dave Peach, president of Title Guaranty Escrow Services, said new home sales volume is increasing is because supply exists in all price ranges.

He also noted developers are already selling properties scheduled for completion in March and April of next year. Buying on that sort of lead time hasn't been seen in more than a decade, he said.

The ability to complete enough inventory to meet demand is the only factor that could slow the market, Peach said.

"The biggest problem is a shortage of labor to build the homes on all islands," he said. "That could slow the market down."

The top seller in the new homes category in July was a project by developer Bert Kobayashi in Kapolei, where 66 new sales contracts were signed. The average price paid for a new home in Kapolei Kai was $260,000.

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