Posts (RSS)New Home Sales Rose Amidst Repo Homes Lists
Sales of newly built single-family homes in June soared by 11 percent from May sales amidst repo homes lists, based on data released by the U.S. Commerce Department. The June increase was the highest monthly increase in almost 8 years, as buyers took advantage of lower home prices largely driven by the low prices of properties in repo homes lists.
According to the Commerce Department, the 11-percent monthly increase was far above the 3-percent increase predicted by economists for June new home sales. The adjusted annual pace of new home sales in June increased to 384,000 units, the highest level reached since November last year.
However, compared to new home sales in June last year, June sales this year marked a 21-percent drop. Sales of newly built homes are still being battered by the low prices of units in repo homes, New homes now stay in the market for almost one year before they are sold. In 2007, new homes stayed in the market for only about 6 months.
Economists say that despite the monthly rise in new home sales in June, the housing sector is still not recovering as expected.
In the Northeast, sales of newly built homes declined by 11 percent compared to sales in June 2008. In the West, new home sales fell by 10 percent while in the Southern States, new homes sales dropped by more than 33 percent. Only the Midwest experienced a rise in new home sales, with an increase rate of 6 percent.
While new home sales increased in June, their median price continued to decline, falling from $232,000 in June 2008 to $206,200 this June.
Economists expect new home prices to continue with their downward slide because of construction supply costs, competition from repo homes lists and low demand from potential new-home buyers.
MFR chief economist Joshua Shapiro said prices of newly built homes will continue to hover in the lower levels, especially in the upper price ranges.
Similarly, 4Cast senior economist David Sloan said that market recovery will be modest because of lack of improvements in consumer income levels.
According to economists, despite the rise in new-home sales for three months in 2009, the continued increase in unemployment rates, the lack of increase in wages and the tightness in home lending will drive the continued growth of repo homes lists and continued difficulties in the housing sector in the last months of 2009.