July showed an increase in new home sales, higher prices and lower inventory, will it continue or will the end of summer bring fewer sales?
In July, a report released from the U.S. Census Bureau and Department of Housing and Urban Development stated that sales of new homes increased and the supply of new homes decreased.
The rise in new home sales could be an indication that the housing market is improving, but as we’ve seen more than once over the last few years, a short increase in sales can mean nothing. The good news is that sales have been slowly trending up since April; the jump from June to July was the largest of the year.
New home sales for July were at a seasonally adjusted annual rate of around 433,000, which represents the highest adjusted annual rate since Sept. 2008. The number represents a 9.6 percent increase over June’s revised rate of 395,000, which is better than most industry analysts expected. Unfortunately, the rate is still nearly 17% lower when compared to the revised numbers from July 2008 (520,000). The July sales rate is about 26 percent higher than the lowest rate of the year, which was posted in January (322,000).
From June to July, the number of new houses sold in the Northeastern United States rose 24.5 percent, which was the highest increase in the United States, followed by a 14% increase in the South and a 1 percent increase in the West. New home sales in the Midwest fell by about 8 percent.
At the end of July 2009, the seasonally adjusted annual estimate of new homes for sale was 271,000. This number represents a 7.5 month supply of new homes. The figure hasn’t been that low since April of 2007, and it is a great deal lower than the 13 plus month supply that was reported for January. These numbers have some analysts wondering how much of the sales are due to the $8,000 tax credit for first-time home buyers; there’s some worry that sales of new homes will drop once the program expires on November 30th.
Reports about an increase in existing home sales, the government’s report showing a short upward trend in new house sales and a downward trend in the supply of new homes, back up data found in the S&P/Case-Shiller Home Price Indices. This report showed home prices rising in June in comparison to May in 15 of the 20 cities that are tracked.
Overall, the country is seeing solid improvement in most areas; this could be a tangible sign that housing, nationally, is nearing the bottom. Some stats indicate that the bottom may have already arrived in some areas and that we’re right around the corner in others. We’re still facing high delinquency rates and high unemployment though, so if you’re a home buyer, hire a professional and look closely at your local market.
Sources:
Housing Sales Historic Press Release – www.Census.gov
Mortgage Delinquency Rates Hit Another Record – www.MarketWatch.com
S&P Case-Shiller Home Price Indices – www2.StandardandPoors.com
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It’s always good to get evidence that the housing market is nearing or is at the bottom, though I do agree that the $8,000 tax credit may have had some influence on the sales numbers. The inventory being lower is welcomed news.
The economy will recover soon. But I wonder if the housing market in Detroit will ever recover. That place seems to have been really devastated beyond hope.
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