June New Home Sales Rise 11 Percent

From the AP:

WASHINGTON – New U.S. home sales rose by the largest amount in more than eight years last month, in another sign the housing market is finally bouncing back from the worst downturn in decades.

The Commerce Department said Monday that sales rose 11 percent in June to a seasonally adjusted annual rate of 384,000, from an upwardly revised May rate of 346,000.

It was the strongest sales pace since November 2008 and exceeded the forecasts of economists surveyed by Thomson Reuters, who expected a pace of 360,000 units. The last time sales rose so dramatically was in December 2000.

Sales have risen for three straight months. The median sales price of $206,200, however, was down 12 percent from $234,300 a year earlier and down nearly 6 percent from $219,000 in May.


24 Responses to “June New Home Sales Rise 11 Percent”

  1. 1 Dave Crider July 27, 2009 at 8:14 PM

    Well this is really good news and hopefully a little light at the end of the tunnel if you will. An interesting part is the median sales price down to $206,200 from $234,300 a year ago. I wonder if it is just people now buying cheaper houses or are builders reducing the price so buyers are able to get the house they want cheaper.

  2. 2 Jessie Maguire July 28, 2009 at 8:45 AM

    The rise in home sales is a positive sight. With all of the depressing news regarding the economy people are happy and ready to have some good news. THe rise in home sales builds confidence within people reinforcing the idea that the economy can return to “normal.” With respect to the decline in the median price level I think that is one of the most positive parts of the increase in home sales. It means that more people are able to afford houses at a price that they can afford to pay for and live in. I hope that this low price level stays that way for a long time.

  3. 3 Sanamjit Bains July 28, 2009 at 10:47 PM

    Its good to see that sales of homes have increased. Its seem like the inflated prices are coming down towards an equilibrium where more people can afford houses.

  4. 4 Sara Tirado July 29, 2009 at 4:52 AM

    I have to believe the numbers. I know a few people who bought a home last month. As it turns out it is cheaper to buy a home than it is to rent a home. I feel this is a good sign. This was how the real estate market is supposed to work. It is supposed to be cheaper to own, otherwise why own?

  5. 5 Lauren Swartz July 29, 2009 at 11:56 AM

    This is directly relevant to our text’s discussion of supply and demand curves. The prices of homes dropped, and so the demand for homes rose. Likewise the fed lowered the interest rate slightly encouraging investment spending. If these factors had failed to influence the struggling housing market it would be quite suprising.

  6. 6 Nick July 29, 2009 at 1:33 PM

    To comment on Sara’s statement, I don’t think it is always true that owning should be cheaper than renting. The reason people purchase houses is so that have something to show for in the long run. In a strong economy, I believe that owning a house would always cost more than renting. The incetive of owning is something tangible, something you can call your own and hopefully an investment. So it would make sense that home sales have risin with a decrease in cost and renting prices remaining constant or perhaps even rising.

  7. 7 Wen-Li Chan July 29, 2009 at 10:39 PM

    It is indeed a very good news. However, I’m still skeptical about this rise of the housing market. The economy is still very fragile right now. Any little thing coule trigger a bigger trouble. I’d rather still expect the worst. A lot of business are still at the edge of closing. If there’re more people losing their jobs, that could bring down the home saies again.

  8. 8 Shannon Lackey July 30, 2009 at 11:49 AM

    I am agreeing with Nick, I think that owning a home should not be cheaper than renting, usually it is a touch more, but the benefits of owning are far more greater than the few extra you pay for a mortgage instead of rent. As much as I am happy to see an increase in sales, a lot of it has to do with how incredibly low the housing market is, it is only natural for sales to increase especially since the market was practically at a standstill for the last year. I know a lot of places where the market is still dead and people are still hurting. The economy still seems a little uneasy and I bet it is putting a lot of people to purchasing a home. I guess time will tell how it will go, I hope everything stays on the up and up, but you can never be too sure. I am still planing for the worst and hoping for the best.

  9. 9 Heather July 30, 2009 at 10:38 PM

    This is definitely a positive sign. However such positive numbers should be faced with skepticism; the housing industry has along with the adjusting mortgage rates seem all too good to be true. Home owners, especially these days should face the industry with a great deal of skepticism, and take time carefully analyzing what they are getting into. More foreclosures and homeless families would be a greater hindrance to the economy than the static, sour housing market

  10. 10 Thomas Babcock, Japan July 31, 2009 at 9:22 PM

    This happens every year at this time june n july house sale always spike. with house sale you can’t look at one month look at the last six years and you will see the over all downward tend. This means nothing in the long run. If house sales are so peachy then why durables down?? usually when house sale are good durables good sale go up. Here people are hunkering down getting read for the other shoe to drop.

  11. 11 Abby August 2, 2009 at 10:44 AM

    While the statistics of new home sales are optimistic, the positivity may also just be a symptom of our suffering economy. First, these are NEW home sales and do not take into account the hurting market of existing home sales. Second, these new housing developments are generally cheap housing (i.e, median price of $206,000), that people may be resorting to out of their inability to purchase more expensive real estate in more desirable locations. Third, the 12% drop in median sales price signals that people may be buying up these houses because of their “bargain” status, and not because they are recovering from the recession and making moves to “better” houses. As positive as the rise in new home sales may be, it really just seems like a side effect of our broader, weak economy.

  12. 12 Jessica Tsai August 2, 2009 at 3:53 PM

    These numbers are encouraging but I agree with Abby’s perspective on this issue. The article fails to acknowledge the existence of thousands of homes that remain unsold due to either characteristics of the homes that make them more unaffordable or the fact that our economy is still struggling. It states that while sales have been rising for several months, the median sales price actually fell significantly. The numbers in the article correspond to homes that are either in communities that have more affordable housing or homes that are smaller and inherently more affordable despite the effects of the recession. On the bright side, as mentioned in the article, home sales for more affordable properties are indeed rising; I personally have a friend who recently purchased a house in a well reputed suburban community just after completing graduate school. Many individuals are taking advantage of falling prices in the recession to make purchases they normally would not be able to make without many years of investment. These purchases will correspondingly contribute to stimulating the economy and hopefully bring us to a better future sooner.

  13. 13 Alejandro Cortez August 3, 2009 at 1:03 AM

    It is disheartening when you are bombarded constantly by newscasters saying that there is no end is sight for this economic downward spiral. It is somewhat reassuring to read that the numbers are up for the first time in a long time. However, Dave brings up a good point; the median sales price of a home is down 12 percent from last year. So one has to conclude that people are willing to buy houses if they are cheaper and one reason they are cheaper now is because the prices a year ago were inflated and did not accurately represent the equilibrium price. I wonder if the prices of homes will continue to fall. Have we finally reached an equilibrium price, or will sales continue to rise because the prices of homes continue to drop?

  14. 14 Stacey Smarker August 3, 2009 at 10:27 AM

    With the rise in the home sales this is a better opprounity for people to buy or invest in these homes. Hoepfully people will be able to purchase homes at rates that they can afford and at reasonable prices. However, with this buyers market, there are many homes that havent sold yet and are having a hard time being sold that still brings the numbers down.

  15. 15 Carolyne Abrams August 3, 2009 at 11:50 AM

    A small, but depressing step. With the following excerpt:

    “At the current sales pace, there are enough new homes for sale to last nearly nine months. That’s slightly less time than in May but still much longer than the six-month mark that indicates a balanced market.”

    I think it is safe to assume that there will continue to be a decline in prices. I would imagine that once the homes reach the six-month mark, we will hit equilibrium and the supply will finally start to deplete, leading in higher ticket prices of the homes.

  16. 16 felicia hall August 3, 2009 at 7:37 PM

    I had a recent conversation with someone who is employed at a title company. She was talking about how the residential sales have risen, while commercial property has fallen. This article displays the same. It’s a wonderful how people are slowly but surely taking advantage of the first-time buyers credit, as well as the low prices of homes. The only thing that is not so wonderful is the fact that some of those homes that are low priced, create losses for the owners. Therefore, those that are able to purchase while these homes are under priced will eventually have a great investment on hand in my opinion.

  17. 17 Joseph Garcia August 3, 2009 at 11:41 PM

    This isn’t very surprising. It was only a matter of time before home prices fell low enough for other people to jump on the amazing deals on quality homes. I do feel for those who get forecloured, though. Just last week, a friend who I went to high school with got foreclosed because the plumbing business wasn’t doing so well. With all these expectations exceeded by economists, I’m beginning to be more hopeful of our economy and President Obama’s stimulus plan.

  18. 18 Carolyne Abrams August 4, 2009 at 2:37 PM

    I can’t imagine that prices of homes will hit what they were in late 2006 for quite some time. I understand that prices of homes rise and fall but such a drastic change is going to leave people in a very tough situaton for YEARS to come. For instance, we had purchased a home in February 2007 (yeah, I know, couldn’t have been much worse of a time) and am literally hundreds of thousands underwater. Fortuanately I love my home now, but if we were to find employment elsewhere, even if it was 7 years down the road, would we really be able to sell our home for what we owe? Highly doubt it. In that situation, we would have no other choice but to go through foreclosure. Point being is that I can see foreclosures much higher than they have been in the past for many years to come.

  19. 19 Jessica Schimke August 6, 2009 at 12:51 AM

    It’s good to hear the housing market seems to be recovering. The median sales price will presumably rise back up in time as well and life can get back to normal. It’s a great time to buy a house right now if you can afford it.

  20. 20 Maricar De Los Reyes August 6, 2009 at 3:24 PM

    This is one of the best times to buy a house. Property price has gone down so much, its almost crazy! I had a friend that just recently bought a 2,533 sq ft home for $400,000. That’s 5 bedrooms, with a pool, plus 3 acres of land. AND ITS NEW! It’ll be done building in Nov. Another friend was lucky enough to get their hands on a small mansion of 8 rooms. The previous owners were heading towards foreclosure and they couldn’t bring the house out of it. So they agreed to give my friend and his wife the house if they had enough money to bring it back to the surface. They paid $80,000 to bring it out, plus $125,000 for the rest of the payments, and now they’re sitting pretty with a fully paid, small mansion in Sacramento. WOW. Now I truly wish I had that kind of money. When will homes ever be this low again?

  21. 21 Juan Balderas-Econ 101 August 6, 2009 at 9:15 PM

    It seems to me that many of the people buying homes are those who were priced out of the market previously and who refused to take on extreme mortgages and who wanted to have a large enough downpayment. Now that prices for homes have fallen so drastically, they’re finally able to purchase a home. Another group purchasing these homes are investors grabbing up real estate that they’ll rent out.

  22. 22 marie moussa September 15, 2009 at 9:18 PM

    A rise of 11 percent in new homes is good news. The new homes are selling 6 percent below what they were selling for the previous year. One can only wonder as to the reasons; is it because the new homes are built with cheap labor? Or, did the builders get a low interest rate on their loans? I hope this rise will help new families to own new homes

  23. 23 Brodeick Nickelberry Jr. December 13, 2009 at 7:19 PM

    I Believe that home sales only rose because lots of people where get foreclosed and the banks had to sell the houses for dirt cheap to get rid of them. also the value of homes went down so people sold houses for a lot cheaper then they used to be.

  24. 24 angela December 16, 2009 at 3:35 PM

    It seems to me that the economy is recovering. While this 11 percent on sales represent this recovery, unfortunately there were a lot of people that have lost their homes in the last year.
    Some people are taken advantages of first time buyer and if they can afford it why not.

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