Sales of new homes rise to April 2010 level
Inventory shortage may be curtailing sales, but for the first time in seven years, housing is on track to boost the economy.
The number of new homes sold rose again in July, equaling the best month since April 2010, when a tax credit was in effect.
The number of new homes sold increased 3.6% over June, to a level 25.3% above the number sold last July, the Commerce Department reported.
"Sales of new homes in July returned to the same solid pace they set in May, which was the fastest sales rate we’d seen in more than two years," Barry Rutenberg, the National Association of Home Builders chairman and a homebuilder in Gainesville, Fla., said in a news release.
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"This is further evidence that consumers are becoming more confident in local housing markets as they look to take advantage of today’s very favorable prices and interest rates."
One factor holding back the sale of new homes is the tight supply: Nationwide, only 142,000 new homes were for sale in July, the lowest number on record. At the current rate of sales, that is a 4.6-month supply.
The lack of supply is also constraining the sale of existing homes, especially in lower price ranges. But the tight supply of homes for sale is contributing to an increase in prices.
While the increase in sales is encouraging, the number of homes that builders are on track to sell this year is only 372,000, about half the 700,000 sold in a normal year.
Still, for the first time since the recession hit, real estate is on track to boost the economy this year. The Associated Press writes:
The housing market's recovery will likely add to economic growth in 2012 for the first time in seven years. Home purchases, construction and prices are gradually but consistently increasing, though they remain far below levels seen in a healthy economy.
All of which is a big change for the residential real-estate industry, which has been a major drag on the economy since the housing bubble burst more than five years ago.
About Teresa Mears
Teresa Mears is a veteran journalist who has been interested in houses since her father took her to tax auctions to carry the cash at age 10. A former editor of The Miami Herald's Home & Design section, she lives in South Florida where, in addition to writing about real estate, she publishes Miami on the Cheap to help her neighbors adjust to the loss of 60% of their property value.