New Home Sales Continues to Rise

The news today from the Census Bureau on new home sales for July was up 9.6 percent from the revised June sales. July sales however were 13.4 percent less than the same period in 2008.

The really good news is the drop in the inventory level, which at the end of July was 271,000 homes. This represents, based on the current sales pace, a supply of 7.5 months, down from 12.4 month supply at the end of May. The inventory supply is approaching acceptable territory.

The median sales price of new houses sold in July 2009 was $210,100, down from $231,600 in June. The average sales price was $269,200 for July, down from $290,600 in June.

The new home sales numbers are based on contracts signed, not closings, so a push at the near end of the tax break for first time homebuyers probably had some effect on the numbers.

CNBC reported that there was an increase in July of 33 percent for houses yet to be built and a decrease of 6 percent in the number of sales of spec inventory. This is probably because builders are focusing on new builds because their margins are better and the product smaller and less expensive, better meeting current market demands.

Calculated Risk predicted that there would be two housing bottoms, one for sales and one for prices. That is being born out in a bottom for the number of sales, which now has several months’ backing. Except for the Case-Shiller Home Price Index, most real estate data shows a slowing, but still decreasing values.

The lack of activity in the $250+ price range is mainly due to the lack of move-up buyers to start the sales chain. Unemployment and foreclosures bear heavily on all market segment and drives the average prices south.

Here in Atlanta, the local data collector and numbers' cruncher for new construction is expecting a positive year-over-year increase in closings for single-family for July ... IF SINGLE-FAMILY ATTACHED IS EXCLUDED. Yes, we're anxious for some good news.