In June, new home sales went up from the record low they were in May. But because new home sales fell so low following the home buyer tax credit expired last spring, June’s numbers were nevertheless the second lowest on record. Some believe the worst of the post-tax-credit slump is over. Many think it is not really good news when considering the high U.S. unemployment rate and foreclosures nevertheless happening.
Nobody feels better about the new home sales increase
The Commerce Department said on Monday that new home sales jumped 23.6 percent to a 330,000 unit annual rate from a downwardly revised 267,000 units in May. CNBC points out that new home sales in June was nevertheless the second lowest since 1963 when records started being kept. However, the percentage increase was the largest increase since May 1980, and partially offset the historic 36.7 percent decline in May. All year, there is an expectation from economists for the U.S. housing market to stay pretty low.
Record low mortgage rates make things worse
New home sales were expected to be much worse because of the lowest mortgage rates on record. Bloomberg reports that low mortgage rates are the only reason why the housing market has is better than it was with the recession that is the worst since 1930. Since unemployment is at 10 percent, the majority are unwilling to put their money into a home while foreclosures are leaving more and more homes unsold. New home prices are continuing to fall. $ 214,400 has become the new median price for new homes which is a 0.6 percent decrease from last year.
U.S. housing market still makes economic recovery extremely hard
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. Weak new home sales mean you will find fewer jobs in the construction industry, which has historically driven economic recoveries. Each new home built creates, on average, three jobs for a year and generates about $ 90,000 in taxes paid to local and federal authorities, as outlined by the National Association of Home Builders. Many individuals feel the effect of this.
Further reading
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/
