The record low in May didn’t keep new home sales from jumping in June. June was nevertheless the second lowest month on record after new home sales dropped so dramatically after the end of the home buyer tax credit. Some believe the worst of the post-tax-credit slump is over. Numerous think it is not really good news when considering the high U.S. unemployment rate and foreclosures still happening.
New home sales up, but up isn’t really better
Monday the Commerce Department reported from May to June, the unit annual rate went up 2.36 percent from 267,000 to 330,000. CNBC reports that records weren’t kept until 1963, and since then, June was still the second lowest month. However, the percentage increase was the largest increase since May 1980, and partially offset the historic 36.7 percent decline in May. Besides this great increase, it is expected that the U.S. housing market will continue to do poorly all year.
Every little thing seems to worse with record low mortgage rates
New home sales weren’t as bad as expected, in part because of the lowest mortgage rates on record. Bloomberg reports that record low mortgage rates are serving as a stabilizer for the U.S. housing industry that triggered the worst recession since the 1930s. You will find an increasing number of homes without tenants because of the foreclosure rate along with the 10 percent unemployment rate holding people back. New home prices are still falling. From June 2009, the median price for new homes has decreased 0.6 percent to $ 213,400.
U.S. housing market continues to drag on economic recovery
New home sales were 7 percent of the housing market in 2009. Taragana.com reports that number is down from a portion of about 15 percent before the housing crisis. Weak new home sales mean you will find fewer jobs in the construction industry, which has historically driven economic recoveries. Each home that is built gives three new jobs and $ 90,000 in taxes to the government. The effect of this is felt throughout the country.
Additional reading
CNBC
cnbc.com/id/38412228
Bloomberg
bloomberg.com/news/2010-07-26/sales-of-u-s-new-houses-climb-to-330-000-more-than-economists-forecasts.html
Taragana.com
blog.taragana.com/business/2010/07/26/new-us-home-sales-in-june-tick-up-slightly-but-remain-low-as-demand-for-housing-slumps-82763/
