New home sales for June
New home builder confidence rose in June, along with a slight increase in permits issued and housing starts, showing a small rate of improvement in a sector that has struggled in recent years.
Today, the U.S. Commerce Department reported a one percent decline in the sales of new single family homes nationally. Some consider this number a drop, others would consider one percent to be flat with relatively no change.
New home sales varied between regions with the Midwest rising 9.5% from May and the South seeing an increase in sales of 3.4%, yet at the same time, the Northeast saw a dramatic 15.8% drop in sales and the West experienced a 12.7% decline in sales volume of new home sales.
The potential trouble spot as housing starts and permits rise is the inventory levels of new homes on the market. Inventory fell one percent, with the lowest inventory level on record with a 6.3 month supply at current sales rates. Despite confidence rising and starts on the rise, inventory is at historic lows which will help the struggling sector.
“Today’s report shows that new-home sales remain in a holding pattern at relatively low levels,” said Bob Nielsen, chairman of the National Association of Home Builders (NAHB) and a home builder from Reno, Nev. “This reflects what we are hearing from builders in the field, who continue to see uncertainty in the marketplace and are reacting accordingly by keeping inventories at a record low. With inventories at razor-thin margins, any uptick in demand will generate increased building activity in the months ahead.”
“June’s sales numbers illustrate how the fledgling housing and economic recovery go hand-in-hand,” said NAHB senior economist Robert Denk. “Improving confidence in the broader economic recovery — in particular, solid job growth — will bring buyers back into the housing market. But as policymakers debate major changes to the housing finance system, higher downpayment requirements, reducing conforming loan limits and whether to tamper with the mortgage interest deduction, this only fuels consumer uncertainty and keeps the housing market recovery from gaining any real momentum.”