NEW YORK (TheStreet) -- Demand for new homes was uninspired in many U.S. markets in August, as sales activity and consumer confidence both fell short of expectations, according to builders around the country.
Contracts on new homes in August were roughly similar to those inked a year ago, reflecting uneven sales throughout the summer. Builders with growth described it as less-than-stellar, except in Northern California, where the latest technology sector boom has combined with Chinese-investor interest to fuel runaway demand for new homes and steep price increases to match.
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September U.S. sales activity, meanwhile, appears to have turned a seasonal corner, with markets in the Midwest reporting an uptick month-to-date.
"It is a bumpy recovery," said John Johnson, chief executive of Houston, Texas-based David Weekley Homes, the largest privately held U.S. builder, which builds mostly move-up homes in 18 markets across 10 states, largely in the Southwest and Southeast.
"Every week, every month is a challenge. It's inconsistent," said Johnson, but added that the builder is likely to top its 2013 new-home sales figures by 10%. He credits Weekley's line-up of "A" markets, including Houston, Austin and Dallas, Texas as pushing his company's sales to "decent" if not "fantastic" levels.
"The market's OK, but it's not robust," Johnson said.
Consumer confidence, he said, is "lukewarm at best," in large part because the labor recovery isn't convincing.
"Until we get a robust employment situation going again, I think it's going to ebb and flow," he said of new-home demand.
"Those who have a need to buy will buy, but there is a large amount of people sitting on the sidelines because they're still not confident about the future."
Johnson said Weekley's 2014 unit-sales growth won't approach the lofty percentage increases of 2013 and 2012, but that's no surprise.
"From my standpoint, the market's doing about what we expected it to."
Weekley's average new-home selling price is $430,000, up about 4% from a year ago. Johnson said labor costs are about 5% higher than in 2013, and materials are 3% to 5% pricier.
A builder in Central Illinois said new-home demand in September is "coming to life."
"The summer was quiet, but the fall's been pretty vigorous," said Tom Ochs, president of Hoffman Ochs General Contractors, which builds primarily custom homes in Bloomington, Champaign-Urbana and Peoria, Illinois.
Even though demand is repairing, plenty of would-be buyers tell Ochs they must sell their existing home first before buying a new one. Customers face "tough" credit conditions, and closings remain "terribly difficult," Ochs said.
"Lenders are incredibly cautious."
Ochs expects his total new contracts this year won't surpass last year's, but his closings should be better. (Contracts signed this fall will close next year.)
He sees signs of hope.
"A big indicator for me that things are picking up is that lot prices are coming up," Ochs said. "That tells me there's just a little bit more demand."
Despite rising land prices, Ochs has held sales prices steady "to get the sale."