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WASHINGTON (AP) — Americans likely bought more new homes in July, adding to evidence that the housing market is slowly recovering.
Economists forecast that sales of new homes rose 3 percent to a seasonally adjusted annual rate of 360,000, according to a survey by FactSet. The Commerce Department will release the report at 10 a.m. Eastern time Thursday.
Sales of new homes fell sharply in June to an annual pace of 350,000 after reaching a two-year high of 382,000 in May. A sharp drop in the Northeast drove sales in that region to the lowest level since November.
Sales in June were 15.1 percent higher than 12 months ago. But new home sales remain well below the 700,000 annual pace that economists say is consistent with a healthy market.
The housing market's recovery is getting steadier and more sustainable. One reason is that houses are much more affordable.
Mortgage rates have fallen to near-record lows. Housing prices are about one-third lower than they were at the peak of the housing bubble in 2006. Those trends have helped lift sales of new and previously occupied homes.
Sales of previously occupied homes rose in July from June, the National Association of Realtors said Wednesday. Sales have jumped 10 percent in the past year.
Other recent reports also point to a recovery in housing. Home prices are rising nationwide. They increased 2.2 percent in May from April, according to one leading index. That was the second straight increase after seven months of flat or declining prices.
Builders, meanwhile, are growing more confident because they're seeing more traffic from potential buyers. An index of builder confidence rose to its highest level in five years in August.
Builders responded by applying for the largest number of building permits in nearly four years last month. They broke ground on slightly fewer new homes in July than in June. But that was after the number of housing starts had reached a 3½-year high in June.
Though new homes represent less than 20 percent of the housing market, they have a disproportionate impact on the economy. Each home built creates an average of three jobs for a year and generates about $90,000 in tax revenue, according to statistics compiled by the National Association of Home Builders.
The housing market has a long way to go to reach a full recovery. Some economists forecast that sales of previously occupied homes will rise 8 percent this year to about 4.6 million. That's still well below the 5.5 million annual sales pace that is considered healthy.
Many people are still having difficulty qualifying for home loans. Banks have tightened credit standards for mortgages, according to a report last month by the Federal Reserve. That's likely holding back sales.
Another trend holding back sales is that inventories are low. There were only 144,000 new homes for sale in June, just above the record low of 143,000 in May.