New U.S. home sales surged 9.6 per cent in July, rising for the fourth straight month and beating expectations as the housing market marches steadily back from its historic downturn.
The Commerce Department said Wednesday that sales rose to a seasonally adjusted annual rate of 433,000 from an upwardly revised June rate of 395,000. Sales are now up more than 30 per cent from the bottom in January, but are still off nearly per cent from the frenzied peak four years ago.
The median sales price of $210,100 (U.S.), however, was off 11.5 per cent from year-ago levels and down slightly from $221,400 in June.
Last month's sales pace was the strongest since September and exceeded the forecasts of economists surveyed by Thomson Reuters, who expected a pace of 390,000 units.
In a kind of Cash for Clunkers effect, home buyers are rushing to take advantage of a federal tax credit that covers 10 per cent of the home price, or up to $8,000, for first-time owners. Home sales must be completed by the end of November for buyers to qualify.
Builders and real estate agents are pressing Congress for that credit to be extended. If it isn't, sales could reverse their upward trend.
As sales rise, that's likely to make builders more confident about getting going on new projects, and that's likely to lead to more jobs ins the construction industry. “These are crucial elements of a sustainable recovery,” David Resler, chief economist at Nomura Securities, wrote in a research note.
Each new home built creates, on average, the equivalent of three jobs lasting one year and generates about $90,000 in taxes paid to local and federal authorities, according to the National Association of Home Builders .
There were 271,000 new homes for sale at the end of July, down more than 3 per cent from May. At the current sales pace, that represents 7.5 months of supply – the lowest since April 2007. The decline means builders have scaled back construction to the point where supply and demand are coming into balance.
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Source: Alan Zibel
Washington — The Associated Press Last updated on Wednesday, Aug. 26, 2009 11:34AM EDT