New-Home Sales Bounce Back From Record Low in June

Coming off a historic low in May, sales of newly built, single-family homes rose 23.6 percent to a seasonally adjusted annual rate of 330,000 units in June, according to the U.S. Department of Commerce.
“Today’s numbers are an encouraging sign that new-home sales are coming back from an expected slow period that followed the expiration of the home buyer tax credit program,” said Bob Jones, chairman of the National Association of Home Builders (NAHB). “While we still have quite a way to go on the path to recovery, it’s good to see that we are headed in the right direction.”

“It’s worth noting that some of the new-home sales in June were due to move-up buyers who were able to sell their previous home to a tax-credit-eligible buyer, while that program was active,” said David Crowe, NAHB chief economist. “Also, while sales activity is still far from robust, it has picked up some momentum as positive factors, such as historic low mortgage rates, great selection and attractive prices, help draw potential home buyers back to the market. We anticipate that this momentum will continue along with a gradually improving economy, although other factors, such as a critical lack of production and financing, remain a drag on housing’s recovery.”

Sales of new homes rose strongly in three out of four regions in June. The largest percentage increase was the Northeast’s 46.4 percent gain, followed by a 33.1 percent gain in the South and a 20.5 percent gain in the Midwest. The West was the only region where new-home sales did not improve in June, instead falling 6.6 percent to a new record low.

Meanwhile, the nationwide inventory of new homes for sale declined to 210,000 in June, the thinnest it has been since September of 1968. This amounts to a 7.6 months’ supply at the current sales pace.