Recovery in new home sales a boost for the economy

A home is offered for sale by Remax Realty in a Toll Brothers housing development on December 4, 2012 in South Barrington, Ill.

Fresh numbers on new home sales come out later this morning. Lately they've risen to levels not seen since 2010, and those numbers aren't just important to home builders and buyers.

Existing home sales make up more than 90 percent of the housing market, says Greg McBride at If you want to understand just the housing market, that's the important number. New home sales are more of an indicator for the economy at large.

"There's a lot of economic activity taking place in the construction of that new property and its eventual sale," McBride says, "that you don't get with just the turnover of an existing home."

New home sales drive economic growth -- and you could call this crop of new construction "Growth, interrupted."

Los Angeles realtor Allan Glass says a lot of today's new homes were planned years ago.

"You're seeing development projects that had been stalled from the recession picking up steam and being finished," he says.

Because developers and banks are seeing that there's demand. Some even say there's a shortage of housing on the market, with the number of homes for sale at its lowest in almost a decade. Tim Ellis blogs about real estate at He described seeing a picture of a scene at a new subdivision in California.

"There were literally people camping out in tents, waiting for these homes to come on the market," he says. "The sales office opens and they're sold out like the first day."

He says first-time buyers are being pushed into new homes because investors are snapping up the bargains, the short sales and foreclosures.

About the author

Eve Troeh is News Director at WWNO-FM in New Orleans, La., helping build the first public radio news department in the station’s 40-year history. She reported for the Marketplace Sustainability Desk from 2010 to 2013.


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