New Home Sales Higher Than Expected In June

The record low in May didn’t keep new home sales from jumping in June. June was nevertheless the second lowest month on record after new home sales dropped so dramatically following the end of the home buyer tax credit. Individuals believe the post-tax-credit slump hasn’t been as bad as predicted and is almost over. Numerous believe the high U.S. unemployment rate and foreclosures make the positive news look like nothing.

New home sales increasing doesn’t mean anything

Monday the Commerce Department reported from May to June, the unit annual rate went up 2.36 percent from 267,000 to 330,000. CNBC reports that records weren’t kept until 1963, and since then, June was nevertheless the second lowest month. The increase, however, was the largest since 1980 which offset the historic 36.7 percent decline that was in May. Besides this great increase, it is expected the U.S. housing market will continue to do poorly all year.

Mortgage rates are record low

New home sales weren’t as bad as expected, in part because of the lowest mortgage rates on record. Since 1930, there has never been a worse recession which has been stabilized by the mortgage rates that are so low. There are an increasing number of homes without tenants because of the foreclosure rate along with the 10 percent unemployment rate holding people back. New home prices are continuing to get lower and lower. From June 2009, the median price for new homes has decreased 0.6 percent to $ 213,400.

Economic recovery nevertheless dependant on U.S. housing market

New home sales were 7 percent of the housing market in 2009. Taragana.com reports the number has gone down 15 percent from where it was before the housing crisis happened. Construction jobs are dropping with weak new home sales meaning the economic recovery can no longer be driven by the construction industry, which historically has been the driving force. The National Association of Home Builders reports that about 3 jobs a year are generated with $ 90,000 in taxes paid to local and federal officials are created with every new home built. The effect of this is felt throughout the country.

Sources for the article

CNBC

cnbc.com/id/38412228

Bloomberg

bloomberg.com/news/2010-07-26/sales-of-u-s-new-houses-climb-to-330-000-more-than-economists-forecasts.html

Taragana.com

blog.taragana.com/business/2010/07/26/new-us-home-sales-in-june-tick-up-slightly-but-remain-low-as-demand-for-housing-slumps-82763/