RTTNews - New home sales increased by much more than expected in the month of July, according to a report released by the Commerce Department on Wednesday, with the report providing further evidence of stabilization in the housing market.
The report showed that new home sales surged up by 9.6 percent to an annual rate of 433,000 in July from the revised June rate of 395,000. With the increase, new home sales rose to their highest level since September of 2008.
Economists had been expecting sales to edge up to 390,000 from the 384,000 originally reported for the previous month.
New home sales remain down 13.4 percent compared to the same month a year ago, although they have moved well off the record low set in January.
Peter Boockvar, equity strategist for Miller Tabak said, The $8,000 tax credit for 1st time home buyers continues to help and we'll see if it continues past the November 30th deadline.
The stronger than expected sales growth was partly due to a sharp increase in new home sales in the Northeast, which jumped 32.4 percent in July. New home sales in the South also showed a notable increase, rising by 16.2 percent.
While new home sales in the West also edged up 1.0 percent in July, new home sales in the Midwest fell by 7.6 percent.
The report also showed that the median sales price of new houses sold in July was $210,100, nearly unchanged from $210.400 in the previous month but down 11.5 percent from $237,300 in the same month a year ago.
Additionally, the Commerce Department said that the estimate of new houses for sale at the end of the month fell to 271,000 in July from 280,000 in June. This represents a supply of 7.5 months at the current sales rate compared to 8.5 months of supply in the previous month.
Standard and Poor's released a separate report on Tuesday showing that the pace of decline in home prices in June slowed by more than economists had been expecting.
The report showed that the S&P/Case-Shiller 20-City Composite Home Price Index fell at an annual rate of 15.4 percent in June compared to a revised 17 percent drop in May. Economists had expected prices to fall 16.4 percent compared to the same month a year ago.
With the annual rate of decline slowing for the second consecutive month, the report showed that the S&P/Case-Shiller U.S. National Home Price Index fell at an annual rate of 14.9 percent in the second quarter compared to the record 19.1 percent decline reported for the first quarter.
On a sequential basis, the S&P/Case-Shiller U.S. National Home Price Index was up 2.9 percent in the second quarter compared to the previous quarter.
David M. Blitzer, Chairman of the Index Committee at Standard & Poor's said, This is the first time we have seen a positive quarter-over-quarter print in three years.
The report also showed that both the 10-City and 20-City Composite Indexes posted monthly increases, with both increasing by 1.4 percent in June compared to May. This marked the second consecutive monthly increase by both indexes, which both edged up 0.5 percent in May.
As seen in both seasonally adjusted and unadjusted data, as well as the charts, there are hints of an upward turn from a bottom, Blitzer said. However, some of the hardest hit cities, especially in the Sun Belt, show continued weakness.
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