Americans bought new homes in June at the fastest pace in more than eight years, a sign that a solid job market and low mortgage rates are bolstering the USA housing market.
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In a separate report the Commerce Department said new home sales increased 3.5 percent to a seasonally adjusted annual rate of 592,000 units last month, the highest level since February 2008.
Low mortgage rates and recent strong jobs reports have helped the real estate market begin to recover from the housing crisis that began almost a decade ago. Greater demand and tight inventories have led to rising prices and signs that housing will help overall economic growth.
June’s median sales price rose 6.1 per cent from a year ago to $306,700.
Last month, the inventory of new homes on the market increased 1.2 percent to 244,000 units.
Sales surged 10.9% in the West and 10.4% in the Midwest, while sales slipped 0.3% in the South and 5.6% in the Northeast. The seasonally adjusted estimate of new houses for sale at the end of the month represented 4.9 months of supply at the current rate. This is a 3.5% hike from the upwardly-revised May rate of 572,000, and is 25.4% above June 2015, when the estimate was 472,000.
Residential building development in the region has increased this year, mimicking national trends.
Builders remain relatively confident that they’ll continue to expand, although their optimism waned slightly in July. The news comes just after the National Association of Realtors announcement last week that existing home sales hit their highest level since 2007. Readings above 50 indicate more builders view sales conditions as good, rather than poor.
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“This report should be viewed as a lens through which to see the labor market and, along with the July readings on initial jobless claims, it continues to signal solid improvement in the employment situation”, said John Ryding, chief economist at RDQ Economics in NY. Fixed residential investment contributed 0.52 percentage point to the first quarter’s 1.1% growth rate for gross domestic product, the broadest measure of goods and services produced across the USA economy, according to Commerce Department data. Instead, the Federal Reserve has raised interest rates only once and mortgage rates have fallen, suggesting the housing and lending markets “were not as solid as some at the Fed and other government agencies would like”.
