The Commerce Department announced on Monday that new home sales jumped 11% in June from May to a 384,000 seasonally adjusted annual rate. Compared to June of 2008, new home sales are still down -21.3%. When compared to 2007, new home sales are down nearly 50%. I want to bring the current numbers into context because it does reveal just how far the industry has fallen and how affected builders and municipalities have been by this downturn.
The inventory of new homes for sale shrunk by -4.1% from last month to 281,000. The inventory of new homes for sale is down -35.6% from last year.
And finally, the month's supply of housing fell -13.7% from last month and -17.8% from last year to a 8.8 month supply of housing.
The median sales price for new homes still fell from $234,300 in June of 2008 to $206,200 in June of 2009.
These are all positive indicators for the new home market. The benefit is that jobs are being created, materials are being purchased, and the new property tax revenue should help municipalities that are struggling to meet their budget.
The "problem" is that the new home market is not the existing home market. In other words, the bigger problem facing the real estate market, the banking system, and the broader economy is not just new home sales, but falling home prices for homeowners. And based on the latest data from the NAR, home prices are still falling based on the ongoing supply and demand imbalance.
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