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Sales of newly-constructed single-family homes rose 5.4% in July compared to June and were 25.8% higher than the pace one year ago, the Commerce Department reported Tuesday.
July sales of new single-family homes reached an annual, seasonally-adjusted rate of 507,000, according to Commerce. That level is above the revised rate of 481,000 (annual, seasonally-adjusted) in June, and well above the July 2014 estimate of 403,000. Tuesday’s numbers fell within the range of forecasts of economists surveyed by Bloomberg ahead of the report.
The volatile new home sales data tallies the number of newly constructed homes with a committed sale each month. Economists view it as a measure of economic momentum and an indicator of future consumer purchases of furniture and appliances. But the small sample size and a margin of error around 15% means the numbers often swing wildly.
The median price of a new home sold in June was $285,900; the average sales price was $361,600. At the end of July inventory stood at 218,000, a 5.2-month supply at the current sales pace. Lack of inventory continues to be a problem in the housing market, in terms of both new homes and previously-owned ones. Economists traditionally say a six-month supply is needed to balance supply and demand.
A separate Tuesday report from S&P/Case-Shiller showed home price growth in June at an annual gain of 4.5%. Sales of existing (previously-owned) homes in July hit their fastest pace in eight years, while housing starts (groundbreakings) also reached their fastest pace in nearly eight years. Builder confidence in the market for new, single-family homes in August rose one point, to a level of 61. A reading above 50 indicates that more builders feel conditions are good than poor.
Tuesday’s release of new home sales includes a revision of prior months’ numbers, which shows the sales pace has been generally picking up since last summer, with dips in November 2014, March 2015, and June.
New home sales numbers (annualized, seasonally adjusted):
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.
Source: forbes.com ~ By Erin Carlyle