The 10% Jump Of July New Home Sales

The new homes sales pace was the highest since September last year. This is the fourth consecutive monthly increase in addition to signs of a market recovery after a collapse that had an annualized rate of just 329,000 units in January, a record low. More people are buying existing and new homes taking advantage of government incentive programs, such as the $8,000 dollar tax stimulus for the first time home buyers. No wonder my neighbor sold his house in two weeks and impressed the neighborhood.

July sales, however, were 13.4 percent below the new home sales of July 2008. Low prices, low mortgage rates and government incentives have all contributed to the increase of new home sales. However, unemployment, rising foreclosures and falling prices kept some buyers on the lookout.

The Obama administration believes that identifying trends in home sales is a more convenient observation of the data in a longer run. In the five months between March to July, the annualized home sales rate has been 373,000 units, compared with 358,000 in the five months through June. This, obviously, shows a positive trend.

All of the new home sales throughout the 2007 were 776,000 and in 2008 the country sold about 485,000 new homes.

Another good development is that the inventory is down too. The new home inventory fell 3.2 percent to 271,000, which is the lowest figure in the past 16 years. Of course, the builders were not building with the same pace as they were doing it in the good times. The slowing economy, which hard hit the housing market has naturally significantly slowed down the building of new homes across the nation.

The average price of the new house fell in July to $210,100, or 11.5 percent below a year earlier.

Written by Armen Hareyan
Data from Department of Commerce
Reuters
AFP