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New-Home Sales Rise in July and Inventories Decline
Sales of newly built single-family homes rose 2.4% to a seasonally adjusted annual rate of 515,000 units in July, the Commerce Department reported, while the number of new homes for sale continued to contract as builders kept a tight rein on inventories.
“With 15 consecutive months of reductions in the number of new homes for sale, builders are clearly doing a good job of chipping away at their inventories,” noted NAHB President Sandy Dunn. “Now that the government has also done its part by passing a much-needed housing stimulus package, we are looking forward to positive effects on new-home sales in the near future.”
“While the improvement in new-home sales in July is definitely a favorable development, it comes on the heels of two consecutive months of significant downward revisions to sales numbers for May and June, so we have to keep the latest report in perspective,” said NAHB Chief Economist David Seiders.
“Nevertheless, we are cautiously optimistic that home sales are approaching a bottom, and that the newly enacted first-time home buyer tax credit (which went into effect as part of the housing stimulus bill on July 30) will help stimulate sales and provide crucial support for a market turnaround,” he said.
The Commerce report showed the inventory of new homes for sale declining for a 15th consecutive month in July to 416,000 units, the lowest number since April of 2007. This was a 10.1 months’ supply at the current sales pace, down from 10.7 months in June.
On a regional basis, where Commerce sales figures are subject to large month-to-month variations, sales activity was mixed in July.
Sales were up nearly 39% in the Northeast and 9.9% in the West; they declined 2.5% in the South and 8.2% in the Midwest.
Every region registered a decline in the number of new homes available for sale in July.
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