KATRINA CAMPINS- National Fox Business News with Neil Cavuto
New homes sales surged in June to their highest rate this year, according to Commerce Department data released Monday, another sign that the housing market could be starting to stabilize even as prices continue to stumble.
Sales rose 11 percent over the previous month to an annualized rate of 384,000. That was far better than analysts were expecting and the largest monthly gain in nine years. But sales were still down 21.3 percent compared with the same period last year.
Home sales were up throughout the country, except in the South, which includes the Washington region. Sales were down 5 percent there compared with the previous month.
This follows a National Association of Realtors report last week showing that existing home sales rose 3.6 percent in June, the third straight month of increase. The recent data have sparked hope among economists that the housing sector could stop being a drain on the economy soon, even as analysts predict a slow, bumpy recovery in the sector.
The uptick in new home sales was a pleasant surprise and probably reflects the impact of the $8,000 first-time homebuyer tax credit, which expires in November, said Bernard Markstein, senior economist and director of forecasting of the National Association of Home Builders. Buyers are also responding to lower interest rates and falling prices, he said. “Some of the fear of purchasing a home has subsided,” Markstein said.
Builders have slashed production during the past year, helping push the inventory of new homes on the market to 281,000, its lowest level since 1998. It would take 8.8 months to sell all the homes on the market in June at the current sales rate, compared with 10.2 months as of May. That is still above a normal six-month supply, but an improvement, analysts said.
“Overall, the housing sector is showing signs of continued improvement. Though the housing market remains weak compared to the peaks, the improved data will continue to feed into market optimism on green shoots,” Win Thin, senior currency strategist for Brown Brothers Harriman, said in a research note Monday.
Despite the smaller inventory, there are still far too many homes on the market, analysts said. And prices took another tumble last month as builders struggled against a glut of foreclosed homes, which has brought down prices across the country. Median new home prices fell about 12 percent to $206,200 compared with June 2008.
Katrina Campins response on Fox News:
Here are my main points:
-3 months in a row (of sales increases) does show a trend, so I agree that this data is good news for the housing market (at least for home sellers to at least gain a little leverage that the market may be finally bottoming out). The housing market still has a ways to go, and I think it will take a while before we are back in any kind of equilibrium between buyers and sellers, so we’ll have to see if this trend continues.
-It is a great time for buyers with prices depressed, low interest rates and the federal tax credit (which expires in November). I think it will continue to be a great time for buyers for the next year. The real x-factor is what will happen to interest rates. Interest rates are artificially low right now and any mortgage professional you talk to believes that rates will be rising over the next couple years. It is not wise to try to time any market bottom, so if you are a long-term buyer, why would you not be looking to make a purchase right now?
-There has been a lot of pent-up demand from buyers waiting to see what happens with the economy. If you look at the stock market’s rally over the last few months and an increasing sense of optimism that we are beginning to move out of this recession, I think people are feeling more comfortable about making the decision to buy a house.
-I agree that unemployment will continue to rise and that this economy is still on shaky ground, but generally speaking i) most people in America do have jobs ii) they have been more conservative with their money and saving for the last couple years and iii) they have been postponing making real estate purchases. For these people that I just mentioned, now can be an excellent time to make a purchase if they are a long-term buyer and have job stability. Look at the stock market rally, as a forward-looking indicator of the optimism that we have now, that we certainly did not have at the beginning of this year. It’s not a time to celebrate, but with interest rates low and a first-time tax credit of $8,000, it can make sense for a large number of Americans to go ahead and make that purchase.
