Looking back on the Commerce Department's report that June's new home sales fell by 8.4% to a seasonally adjusted 350,000 annual rate of homes sold, was not expected. Although many economists were surprised at the sudden drop in sales after promising growth in housing, most are unfazed.
May’s new home sales were just recently revised to show a gain of 15,000 units sold, showcasing a 15.1% increase in new home sales since last June. Also, areas like Southern California and Chicago have experienced a rise in housing prices, as supply stagnated, which increased the number of bidders per house.
But most importantly, the Commerce Department reported that the construction of new homes was at its highest point since October 2008 with an increase of 49,000 more housing starts per year.
If we attribute the fall of new home sales to a lack of real estate inventory, then house prices will continue to rise until the supply of new homes satisfies the demand. Until then, the rise in housing prices may restore confidence to buyers and sellers and annual home sales across the U.S. will increase.
Michael Hobbs, SRA PahRoo Appraisal & Consultancy
Job Posting: Seeking two real estate appraisers for Chicago & Suburbs, salary and bonus available based on competency