Confusing data was reported by the United States Census Bureau and the Department of Housing and Urban Development this morning. Their joint press release showed a strong rise in the sale of new homes. At the same time they reported a drop in the price of new home sales.
The seasonally adjusted sales number rose by 3.6 percent to an annual number of 372,000. This number ties April, 2012 as the highest number of new homes bought in two years and beats economists’ forecasts for the month. The improvement in the housing market has been one of the brighter niches in the sluggish recovery and today’s report beat expert projections. This is causing some to think that the market sector that started The Great Recession is now showing signs of a sustained recovery.
New home sales were up by 25 percent compared to a year ago according to the report.
It seems that once reluctant buyers have returned to the market to avail themselves of less expensive new home prices and dirt cheap mortgages.
According to Freddie Mac based in McLean, Virginia the average rate of a 30-year fixed rate mortgage fell to 3.59 percent. The lowest rate recorded dating back to 1971.
However, according to the report new home prices fell 2.5 percent from July, 2011 sales to a median price of $224,200.
Purchases in the Northeast rose by a stunning 77 percent accounting recovering smartly from a horrible 55 percent drop in June of this year. In the Midwest sales rose by a healthy 7.7 percent. But, sales in the South fell retreated by 1.6 percent while sales in the West also dipped by 0.9 percent.
The joint release also recorded a record low in new home inventory that fell last month to 142,000. At that rate it would only take 4.6 months to sell all new homes on the market. In June, 2012 the number was 4.8 months.
Despite the lower prices, major home building companies reported improving revenue and profits. PulteGroup, Inc. headquartered in Bloomfield Hills, Michigan reported a 32 percent improvement in second-quarter orders. They are the largest builder of homes in the United States. The largest builder of luxury homes in the United States is Toll who beat profit estimates and revenue estimate for their fiscal third quarter which they reported the day before the housing report came out.
Douglas Yearley Jr., chief executive officer of Horsham, Pennsylvania-based Toll, said in a statement:
“We are enjoying the most sustained demand we’ve experienced in over five years, customers who have postponed buying for a number of years are moving into the market.”