New home sales rocketed up 11% in June (from the previous month) to a seasonally-adjusted annual rate of 384,000 units, the Commerce Department said today. It was the largest monthly gain in nine years and it follows a series of reports that suggest the real estate market might finally be bottoming.
But while home sales increased on monthly basis, they fell 21.3% compared to June 2008. And the median home price in June was $206,000, 12% below the price a year earlier.
“An 11% month-over-month increase looks good, but it’s an 11% increase over a very small number,” said Paul Ashworth, Senior US Economist at Capital Economics in Toronto. “It’s the beginning of a new phase, but I’m not sure it’s an exciting new phase.”
Ashworth said sales might have bottomed, but the recovery will be slow.
Daniel Penrod, a senior industry analyst for the California and Nevada credit union leagues, said new home sales increase is a “very good sign.”
“Seeing an uptick is significant,” Penrod said. “The only thing that tempers it is the fact that it’s still well below last year’s same period number… But every little bit counts.”
BusinessWeek editors Chris Palmeri, Prashant Gopal and Peter Coy chronicle the highs and lows of the housing and mortgage markets on their Hot Property blog. In print and online, the Hot Property team first wrote about the potential downside of lenders pushing riskier, "option ARM" mortgages and the rise in mortgage fraud back in 2005—well ahead of many other media outlets. In 2008, Hot Property bloggers finished #1 in a ranking of the world's top 100 "most powerful property people" by the British real estate website Global edge. Hot Property was named among the 25 most influential real estate blogs of 2007 by Inman News.