Just when it appeared as though the recovering housing market was hitting a soft patch, especially in the wake of somewhat lower metrics on the homebuilding and housing re-sales fronts, the Commerce Department has just intoned with upbeat data on the new home sales side.
Specifically, that government agency reported that sales of new residences had climbed by 8.3%, to an annualized rate of 497,000 homes, in June. That estimated volume compared nicely to the downwardly revised May projected figure of 459,000 units. Earlier, the May estimate had been given at 476,000 homes. Expectations for June had been for sales of 484,000 houses.
Moreover, the latest sales pace was a startling 38.1% above the June, 2012 result, underscoring the vigor of the housing comeback, notwithstanding some wrinkles along the way, as we had seen in the aforementioned reports on housing starts and property re-sales.
The lone weak note in this sales report was the fact that the median sales price of a new home slipped to $249,700 last month from $262,800 in May. Still, home prices remained elevated, especially compared to where they were a year ago ($232,600) and several years back, when prices were clearly faltering along with demand.
On the other hand, inventories continued to shrink, falling to an annualized rate of just 3.9 months. That is extremely low, and compared to 4.2 months in May. A normalized rate is some six months. Several years back, when this sector was clearly in a long decline, the supply of unsold homes had approached a full year. Now, what had been a buyers' market has tilted over to favor the sellers, particularly those who are realistic in their expectations.
Breaking the report down by region, meantime, we find that sales jumped in the Northeast, the South, and the West. These latter two regions rank number one and two, respectively, in volume; the lone decline last month was suffered in the Midwest, which is the second smallest locale in the country.
Taken as a whole, this was a very strong report, and given the low supply of unsold homes, we sense that the basic ingredients for a further expansion in this housing category are there.At the time of this article's writing, the author did not have positions in any of the companies mentioned.