New home sales exceeded gloomy forecasts in June, rebounding from a record low in May. Ever since the end of the homebuyers tax credit, new home sales have gone down a lot which makes June nevertheless the second lowest on record. Individuals believe the post-tax-credit slump hasn’t been as bad as forecasted and is almost over. Numerous think it is not really optimistic news when considering the high U.S. unemployment rate and foreclosures nevertheless happening.
New home sales beat forecast, but that’s not saying much
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 points out that new home sales in June was nevertheless the second lowest since 1963 when records began being kept. However, the percentage increase was the largest increase since May 1980, and partially offset the historic 36.7 percent decline in May. Even with this great increase, it is expected that the U.S. housing market will continue to do poorly all year.
Record low mortgage rates do not help anything
New home sales weren’t as bad as expected, in part because of the lowest mortgage rates on record. Bloomberg reports that record low mortgage rates are serving as a stabilizer for the U.S. housing industry that triggered the worst recession since the 1930s. However, increasing foreclosures are swelling the number of unsold existing homes, putting pressure on prices and keeping buyers on the sidelines as unemployment hovers near 10 percent and the economy cools. New home prices are continuing to fall. The median price for new home sales decreased 0.6 percent from June 2009 to $ 213,400.
U.S. housing market continues to drag on economic recovery
New homes sales made up about 7 percent of the U.S. housing market last year. the number is down 15 percent from before the housing crisis, reports Taragana.com. 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. Each and every home that is built gives three new jobs and $ 90,000 in taxes to the government. The effect of this is felt throughout the country.
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/
