Please ensure Javascript is enabled for purposes of website accessibility
Home / Government / New home sales increase in June, but still sluggish

New home sales increase in June, but still sluggish

Workers build a new home July 14 that has been sold in Richmond, Va. Sales of new homes rose nearly 24 percent in June from a month earlier, the Commerce Department reported Monday. (AP Photo by Steve Helber)

Workers build a new home July 14 that has been sold in Richmond, Va. Sales of new homes rose nearly 24 percent in June from a month earlier, the Commerce Department reported Monday. (AP Photo by Steve Helber)

By Alan Zibel
AP Real Estate Writer

Washington — Sales of new homes rose last month, but it was the second-weakest month on record. The lackluster economy has made potential buyers skittish about shopping for homes.

New home sales rose nearly 24 percent in June from a month earlier to a seasonally adjusted annual sales pace of 330,000, the Commerce Department reported Monday. May’s number was revised downward to a rate of 267,000, the slowest pace on records dating to 1963. Sales for April and March also were revised downward.

High unemployment, low job growth, and tight credit have kept people from buying homes. The industry received a boost this spring when the government offered tax credits to homebuyers. But since they expired in April, the number of people looking to buy has dropped, even with the lowest mortgage rates in decades available.

“There’s no question that this is a weak number, but it seems to be more stable,” said Stuart Hoffman, chief economist at PNC Financial Services Group. “The bottom line to all of this is that we need more jobs.”

Sales are down 72 percent from their peak annual rate of 1.39 million in July 2005. More than 600,000 new homes were sold annually from 1983 through 2007. After the housing bubble popped, sales plunged to 375,000 last year. That was the weakest yearly total on records dating back to 1963.

New home sales made up about 7 percent of the housing market last year. That’s down from about 15 percent before the bust.

Weak sales mean fewer jobs in the construction industry, which normally power economic recoveries. Each new home built creates, on average, the equivalent of three jobs for a year and generates about $90,000 in taxes paid to local and federal authorities, according to the National Association of Home Builders. The effect is felt across multiple industries.

Builders have sharply scaled back construction in the face of a severe housing market bust. The number of new homes up for sale in March fell 1.4 percent to 210,000, the lowest level in nearly 42 years.

Because of the sluggish sales pace, it would take eight months to exhaust that supply. That’s above a healthy level of about six months.

The median sales price in June was $213,400. That was down 0.6 percent from a year earlier and down 1.4 percent from May.

New home sales rose 46 percent in the Northeast, 33 percent in the South and 21 percent in the Midwest. The West posted a decline of nearly 7 percent.

“One month doesn’t make a trend and the roadblocks to a healthy housing market are high, the most important one being the still-high jobless rate,” according to a note to clients attributed to BMO Capital Markets economist Jennifer Lee. “But with borrowing costs at record lows, prices also remaining low, those with jobs who can afford a home may be enticed.”

Copyright 2022 The Associated Press. All rights reserved. This material may not be published, broadcast, rewritten, or redistributed.

One comment

  1. This is a great new about the new home sales especially after the tax credit expires. We need good news like this for the next 3 to 5 months and hopefully that will calm the market. Along with new homes sales its very important to look at incentives for existing sales as well. Thank you again for the great news.

Leave a Reply

Your email address will not be published. Required fields are marked *

*