March 3, 2021

Sales of New Homes Fell Again in July

Sales of new homes reached an annual rate of 298,000 in July, down from a rate in June that was revised to 300,000 from 312,000, the Census Bureau report said. The July figures fell short of analysts’ expectations for a rate of 310,000.

The median sales price of a new home was $222,000 in July, also down from the previous month. The stock of new homes for sale at the end of July was 165,000, the lowest this year, and would last slightly more than six months at the current sales rate.

For months, most indicators of the housing market have suggested bleak conditions. The number of permits issued to builders of single-family houses has also declined.

Patrick Newport, United States economist for IHS Global Insight, said that his company had forecast that sales of new homes would fall to a record low this year, 319,000, compared with 321,000 in 2010.

“It has gotten worse for builders,” Mr. Newport said. “They are stuck in a market where they cannot sell new homes.”

In addition, demand for new homes is stagnant despite record low mortgage interest rates, and competition from foreclosures continues to cloud the sector, said Joshua Shapiro, chief United States economist at MFR Inc.

“This suggests that prices will continue to edge lower at the bottom end of the market even as demand for these homes picks up a bit,” Mr. Shapiro said.

The sales rate in July came close to the record low of 281,000 in February, and the level of inventories in recent months this year has been the lowest recorded since December 1967, he wrote in a research note.

“We are just bouncing along the bottom,” Mr. Shapiro said in a telephone interview. “There is no indication out there that anything is improving. It is bouncing along at historic lows at this point.”

Economists said it would take a turnaround in the American job market to return some vitality to the housing sector.

“We need job growth but in conjunction with that, housing prices have got to stop dropping,” Mr. Newport said.

Still, one analyst said that the market was showing the potential to recover in the years ahead despite weakness in the monthly data. The analyst, Russell Price, a senior economist with Ameriprise Financial, noted that median and average prices were higher in July compared with a year ago.

“Generally we are forming a base in the housing sector this year,” he said. “On aggregate, I think that conditions are solidifying at historically low levels. We are unlikely to go any further down.”

Mr. Price said, “As the economy does recover, and you get less competition from foreclosure sales, the market is poised for a relatively solid rebound in the years ahead.”

Article source: http://feeds.nytimes.com/click.phdo?i=357456e0ad4498ef9f6eb968ed46fdb8

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