Steel Markets
New Home Sales Fall for the 2nd Month
Written by Sandy Williams
August 25, 2014
Sales of new single family homes slipped 2.4 percent in July according to the most recent Department of Commerce estimates. Sales were down for the second month in a row at a seasonally adjusted annual rate of 412,000, but still 12.3 percent above the July 2013 estimate of 367,000.
The July sales rate was below economist predictions of 415,000 to 455,000 and was in contrast with improved builder confidence and a 15.7 percent jump in housing starts for the month.
“We are somewhat surprised by this dip,” said National Association of Home Builders chairman Kevin Kelly who added, “builders are increasing their level of inventory in anticipation that sales will gradually improve during the rest of the year.”
“Though new-home sales is a volatile metric that can fluctuate significantly from month to month, the economic fundamentals are in place for an ongoing housing recovery,” said NAHB Chief Economist David Crowe. “Consumer confidence continues to improve, mortgage rates are at yearly lows, and the labor market is healing. These factors should help spur pent-up demand.”
Analysts say new home buyers may be deterred by rising home prices that are not in sync with wage growth and by less expensive options in the existing home market. The median sales price of new houses sold in July 2014 was $269,800; the average sales price was $339,100. In comparison, the median price for a single family existing home was $223,900.
New homes are also competing with an increased inventory of available existing homes. The seasonally adjusted estimate of new houses for sale at the end of July was 205,000, up 4 percent from June to July, and a 6 month supply at the current sales rate. Existing single family home availability rose 3.5 percent for a 5.5 month supply.
Sales fell in all regions except the South which saw a gain of 8.1 percent from June. New home sales fell by 30.8 percent in the Northeast, 15.2 percent in the West and 8.8 percent in the Midwest. On a year over basis only the South showed a gain at 33.2 percent.
Sandy Williams
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