Photo: Ron Cogswell/Flickr
New single-family home sales in the US defied economists’ expectations and saw an unexpected boost in July. Sales were up 12.4 percent from June, the highest level since October 2007, according to new data released today by the Commerce Department.
New single-family home sales, which make up about 10 percent of overall home sales, were also up over 31 percent year-over-year to a seasonally adjusted annual rate of 654,000 units in July.
Last month, economists polled by Reuters had predicted single-family home sales slipping to a rate of 580,000 units in July.
June’s pace was revised down to 582,000 units from the previously reported 592,000 reported units.
The July increase likely exaggerates housing market strength, says Reuters, as it has not been matched by robust housing starts.
New single-family homes sales were up 40.0 percent in the Northeast, and increased 1.2 percent in the Midwest.
Sales in the South jumped 18.1 percent to their highest level since July 2007, but were flat in the West — which has seen a sharp increase in home prices amid tight inventories.
The increased demand seen in new homes could be the result of a tightened inventory of previously owned homes on the market, according to Reuters. Inventory saw a marked decline of just over 12 percent month-over-month, and over 17 percent year-over-year.
The inventory of new homes on the market also dropped nearly 3 percent last month, to 230,000 units. This was the lowest level reported since November last year. Builders will need to ramp up construction activity in order to meet demand.
Despite tight inventory and increased demand, the median price for a new home slipped 0.5 percent from last year to $294,600. The seasonally adjusted estimate of new houses for sale at the end of July was $233,000, representing 4.3 months supply at the current sales rate.
You can view the Commerce Department’s report here.