Sales of newly constructed single family homes went up by 11% in June to seasonally adjusted annual rate of 384,000 homes. (AP, Yahoo News) The gain over May is more than expected and it is the largest monthly gain over 8 years as buyers took advantage of low prices, interest rates and $8,000 first time home buyer credit.
Sales have risen for three straight months and this gain was much greater than expected by economists. However the new homes sales are 21% below the numbers of a year ago and median home sale price went down by about 6% in the month of June.
Last week, the National Association of Realtor reported that existing home sales increased by 3.6% in June. These are all encouraging news that the housing market is bouncing back. The median home sale price was down by 12% from a year earlier and also down about 6% from May. The lower home prices and interest rates are great news for first time home buyers as they are rushing to take advantage of the $8,000 tax credit.
There were 281,000 new homes for sale in June which represents 8.8 months of supply – the lowest since October 2007. This shortage is good news for home builders as they have significantly been affected by this housing recession as well. If the number falls to under 6 months supply, home builders would be comfortable to start constructions assuming the financial institution would start lending on construction projects.
