Sales of newly built, single-family homes declined 12.4% to a seasonally adjusted annual rate of 276,000 units in July, according to data released by the U.S. Commerce Department
Sales of newly built, single-family homes declined 12.4% to a seasonally adjusted annual rate of 276,000 units in July, according to data released by the U.S. Commerce Department. This was the lowest sales rate for new homes on record.
"The slow pace of economic recovery and worries about job security are weighing heavily on the minds of potential home buyers right now," says National Association of Home Builders Chief Economist David Crowe. "As a result, the housing market is clearly in a holding pattern. That said, NAHB does not project that a double-dip recession is in the cards, and we are looking for employment gains later this year to help bolster sales activity moving forward."
Sales of new homes fell across every region in July, with a 13.9% decline registered in the Northeast, an 8.3% decline in the Midwest, an 8.7% decline in the South and a 25.4% decline in the West.
Meanwhile, the latest figures indicated that builders are keeping a tight rein on the inventory of new homes for sale. That inventory remained unchanged at 210,000 units in July. However, due to the slower pace of sales activity, the month's supply of homes rose to 9.1 from 8.0 in the previous month.
Despite this downturn, nationwide housing starts inched up 1.7% to a seasonally adjusted annual rate of 546,000 units in July from a downwardly revised figure in the previous month, according to U.S. Commerce Department figures. The gain occurred entirely on the multifamily side, with single-family housing production falling 4.2% to 432,000 units.
ìRight now the housing market is essentially in a holding pattern,î Crowe says. ìAs our latest member surveys have indicated, builders are seeing greater hesitancy among potential home buyers who are uncertain about whatís in store for the economy and jobs going forward. That said, favorable home buying conditions including historically low mortgage rates and low house prices should help spur additional demand as the job market gradually improves later this year.î
The entire 1.7% gain in housing production this July was due to a 32.6% jump on the more volatile multifamily side, which brought that sector back closer to trend at a 114,000-unit rate following a major dip in the previous month.
ìTodayís data show that new housing activity appears to be stabilizing in the wake of the expiration of the home buyer tax credit,î Commerce Secretary Gary Locke says. ìHowever, a healthy economy requires not only a robust housing sector but strong employment and incomes, and President Obama remains committed to developing policies that encourage job creation and broad economic growth.î
Two regions registered improved starts activity in July, with the Northeast and Midwest posting gains of 30.5% and 10.7%, respectively. The South, which is the countryís largest housing market, posted a 6.3% decline in starts this July, while the West posted no change in starts activity.
Permit issuance, an indicator of future building activity, declined 3.1% to a seasonally adjusted annual rate of 565,000 units in July. Single-family permits fell 1.2% to 416,000 units, while multifamily permits fell 8% to 149,000 units. Regionally, permits fell nearly 26% in the Northeast, 1.1% in the Midwest, and 4.9% in the West, but grew 3.9% in the South in July.