Posted on 08/24/2005 8:07:57 AM PDT by wagglebee
WASHINGTON (Reuters) - Sales of new U.S. homes jumped 6.5 percent to a record high in July, defying economists' expectations for a decline, as purchases soared in the Northeast and West and median prices dropped, a government report showed on Wednesday.
The Commerce Department said new single-family home sales rose to a seasonally adjusted annual rate of 1.410 million units from a downwardly revised 1.324 million unit rate in June. The July sales pace was 27.7 percent higher than a year earlier.
Economists had expected new home sales to drop to a 1.333 million unit pace from June's originally reported 1.374 million unit pace.
While sales climbed, so did supply. The inventory of homes available for sale at the end of July stood at a record 460,000, up 1.8 percent from June and 15 percent higher than a year ago, the report showed. At the current sales pace, the supply of homes represented 4 months' worth in July.
The median price of a new home dropped for the third consecutive month, down 7.2 percent to $203,800 from $219,500 in June and off 4 percent from the price a year ago, the Commerce Department report said. The July sales price was the lowest since December 2003, when it hit $196,000.
The housing sector has been on a tear for more than four years, with home sales and construction striking regular records on the back of stubbornly low mortgage rates that drove demand. While economists now expect 2005 to be another record year, the sector began to show some signs of softness last month, as resales of previously owned homes dropped 2.6 percent and supply started to climb.
Mortgage rates continue to hover at historically low levels. The 30-year fixed-rate mortgage averaged 5.80 percent last week, lower than a year ago, according to data from finance company Freddie Mac.
Long-term rates should climb over the next year, economists say. The Mortgage Bankers Association pegged rates at 6 percent by year-end and 6.5 percent by the end of 2006. That should slow housing activity and put some downward pressure on prices, which have climbed by double-digit percentages in some areas, economists said.
In July, sales of new homes climbed 36 percent in the U.S. West and 10.1 percent in the Northeast but fell 13.5 percent in the Midwest and 3.5 percent in the South, the report said.
and, and, and, and,
DIMS: "How dare the low mortgage rate be so stubborn. What we need is for mortgage rates to skyrocket like under Carter. It's all BUSH'S FAULT!"
It's not a bubble until hardly anyone is calling it a bubble.
Ah, yes the good old Carter days. No economist has EVER been able to explain how it was even theoretically possible for high interest rates and high unemployment to produce inflation rates in excess of 7%.
When are they going to start talking about the oil price bubble?
Oh yeah, the idea that there is an oil bubble doesn't fit into their agenda.
"Sales Of Previously Owned Homes Slip"
Buried in the article, the second to the last line read "The overall pace of sales, at 7.16 million units, in July was the third highest ever. The second-best showing came in April with a pace of 7.18 million units".
The glass is always half-empty when a Pubbie is in office. The article had no attribution.
Personally, I'm hoarding cash, b/c in 3 - 5 years, when all these ARM's and I/O and option loans mature and rates rise, there are going to be a ton of houses on the foreclosure market.
The only down side to the new home sales rising numbers means that it is that much harder for folks who wish to buy one - to sell the one they currently have.
No, no, no. There really is a housing bubble.
Our mistake is in taking for granted they live in the real world.
In their little make believe world where the stock market has crashed and G.W.B. has set himself up as emperor the economy is extremely fragile, housing not only about to burst but global warming is about to burn us all to a crisp.
Home sales is a lagging indicator. First, because it's for previous month sales, secondly, because those sales weren't agreed to until a month prior to that.
Accelerating sales is indicative neither that a bubble exists, nor that a bubble doesn't exist. Part of a popping "bubble" would include accelerated selling from early-birds trying to get out. It's when the buyers dry up that the pain starts...
On second glance, I see this is for new home sales. The only question worth asking is whether the average price of new homes is hitting a plateau or declining due to increased inventory.
Ping
I have actually had people ring my doorbell and ask me if I was interested in selling my condo.
BWAHAHAHAHA! /evil capitalist laugh
I'm counting on it! There is some money to be made based on some wise, calculated decisions here.
Lucky you.......it took us 3 years to sell our townhouse. and we were not in a position to buy another until that was sold.
don't get me wrong - I'm thrilled about the fact that the real estate market is still robust - but I was just pointing out that it does have a down side.
Food for thought: the housing market accounted for 50% of U.S. economic growth in the first half of this year, according to Merrill Lynch.
Are you comfortable with that "house" of cards? (Pun intended). If you think that's sustainable...
Ahhh yes... the ole stagflation 'daze' of JC and his bunch.
Truly the most incompetent POTUS we've ever had.
Bush's fault!
Here in Michigan it is very hard to sell a house. Mine has been for sale since January.
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