New home sales still slow

New home sales in February 2011 failed to materially improve on an encouraging start to the year seen in the thin trading month of January.

The risk was for a weaker result than what we saw for January. Nevertheless, new home sales are running at volumes considerably below those experienced during the stimulus-driven run of 2009 and early 2010, while both local government building approvals and new housing loan approvals are trending down once more.

At the very time when new home conditions need to be continually improving we are faced with compelling evidence of a considerably weaker 2011 compared to last year.

Interest rates are on hold for now and that is a tick in the box for the housing industry, but an upward bias to rates remains in play. The onus is on Federal and state governments to reinvigorate the policy reform process to reduce the excessive costs of new housing.