The Home Buyer's Korner

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August 31st, 2015

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New Home Sales for July 2015

New Home Sales

New home buyers increased their purchases of new homes in July, with sales showing their strongest gains in the Northeast.

The Commerce Department says new-home sales rose 5.4 percent last month to a seasonally adjusted annual rate of 507,000. That was a recovery from a slide we saw in purchases for June.

Would be home buyers have begun to reenter the housing market this year. Backed by signs of solid job growth over the past two years and relatively low mortgage rates, sales of new homes have jumped 21.2 percent through the first half of 2015.

New-home purchases climbed 23.1 percent in the Northeast, with smaller gains in the South and West, while sales slumped in the Midwest.

Housing is once again driving growth as the stock market stumbles. Americans have felt more confident about their economic prospects, causing them to return to the housing market that initially sparked the Great Recession in late 2007. However, supply of new and existing homes is tight everywhere, pushing up prices and limiting choices.

There is 5.2 months’ supply of new homes available, compared to six months in a healthy market and places like Denver, Colorado has only a one month supply of available homes for sale. The shortage of listing has enabled the median price to rise 2 percent over the past 12 months to $285,900.

Separately, Standard & Poor’s/Case-Shiller 20-city home price index has risen 5 percent in June from a year earlier.

Inventories are similarly tight among existing homes.

The National Association of Realtors said last week that sales of existing homes rose 2 percent last month to a seasonally adjusted annual rate of 5.59 million. That is the fastest rate since February 2007. Sales have jumped 9.6 percent over the past 12 months, while the number of listings has declined 4.7 percent.

There are signs that sales momentum could slow as more Americans are renting instead of buying, due to an inability to find affordable housing and tight mortgage standards. Real estate brokerage Redfin said its demand index fell in July for the fourth straight month.

Much of this year’s demand comes with the creation of a healthier jobs market and continued low mortgage rates. Employers added 3.1 million jobs last year and are on pace to add 2.5 million jobs this year.

Annualized Seasonally Adjusted New Home sales:

July 2015: 507,000

June 2015: 481,000 (revised)

May 2015: 521,000 (revised)

April 2015: 508,000 (revised)

March 2015: 485,000

February 2015: 545,000

January 2015: 521,000

December 2014: 495,000

November 2014: 449,000

October 2014: 472,000

September 2014: 459,000

August 2014: 454,000

July 2014: 403,000

Sales of new homes represent only about 10% of the housing market and data in the monthly Commerce report is revised frequently (three times), making it a less-reliable measure. By contrast, the steadier Existing-Home Sales report from the National Association of Realtors tracks the bulk of the market–previously-owned homes, and shows less volatility.

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