New home sales in U.S had enjoyed a period of high for the past nine months approximately. Plentiful houses were being built to cater the increasing demands for new homes. Unfortunately, the tide of sales of the new homes was hit by a large obstruction. The glimpses of downfall were felt from March 2016, and the economists were in a state of confusion. The property is highly valued in U.S and ever since many years’ new houses sale has shown a very positive result, therefore, contributing to the GDP of U.S.
There was an abrupt drop of 9.2% in March following month of February which had a positive trend for the sales on single family homes. On the contrary, 8.5% decreasewas identified for multifamily building sales. A drastic reductionin sales of new houses in March was something not predicted. Thus, there was no contingency plan set to recover from it. It was getting difficult to understand if this decrease was due to aneconomic slowdown or was it a painful reality of new houses losing their steam of sales?
A point to be evaluated here is that a decline from March till August 2016 doesn’t necessarily mean that the sales of the new houses will keep dropping. Evidence to prove this fact could be straight that the sales of new homesfell on a sharper peak in 2015 from March till August as compared to 2016. However, after August there was an increasing trend in the sales. The demand for the new houses might have fallen during these months, but the trend is still positive as there is still ahigh demand for the new homes in U.S.
The data of the sales is highly unstable which gives indicates that the trend is still positive. The new home buying is only a small proportion of the home buying activity is U.S,and short term fluctuations can obscure the current trends. The consensus, on the other hand, says that the decline could also be because the supply is not enough to cater the resilient demands of people for new houses. The bottom line to summarize this whole point is that the decrease in this year August was lowest in 2016 so far, but it was better than the averages of last year which indicate a positive trend actually in thelong term. Low supplies of homes against higher demands have resulted in high prices which people found difficult to afford and thus reduced the sales.
In my opinion,the trend will shift to positive shortly or after couple of months because U.S has taken a wise decision by supplying more houses to meet the demands of the customers.