New Home Sales Increase in July

Purchases of new homes in the U.S. increased 9.6 percent in July, adding to signs that the economy is continuing to rebound from the worst recession since the 1930s. The number of houses on the market dropped to the lowest level in 16 years.

The gain in sales, together with rising purchases of existing homes and stabilizing prices, indicate the housing slump may be ending. Last month’s pace was the highest in 10 months. The median price of a new home decreased 12 percent nationally to $210,100 from $237,300 in July 2008. Sales of new homes were down 13 percent from a year earlier.

The jump in sales was led by a 32 percent surge in the Northeast. Purchases increased 16 percent in the South and 1 percent in the West. They dropped 7.6 percent in the Midwest.

While here in Charlotte, July sales of new and existing homes increased 9.8% over June, but remain 18.3% below the number of closed transactions for July, 2008. However, the sales figures for July clearly show an improved housing market.

A decrease of 2.6% in average sales price for July over June could be an indication that buyers are taking advantage of attractive home prices and are driving the sales figures. The Charlotte average sales price of $212,977 is still down 7.6% from July a year ago.

Home sales are responding to policy efforts such as an $8,000 tax credit for first-time buyers, the Fed keeping its benchmark interest rate near zero and central bank purchases of mortgage-backed securities to free up funding for housing loans.

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Chuck Webb, Wilkinson & Associates, www.ChuckWebb.net