June shows new home sales going up

In June, new home sales went up from the record low they were in May. June was still the second lowest month on record after new home sales dropped so dramatically following the end of the home buyer tax credit. Individuals believe the post-tax-credit slump hasn’t been as bad as forecasted and is almost over. Others think that increasing foreclosures and the stubbornly high U.S. unemployment rate offset the good news.

Increased new home sales doesn’t help at all

The annual rate for units in May was 267,000 when it jumped in June 22.6 percent to 330,000 reported the Commerce Department on Monday. CNBC reports that records weren’t kept until 1963, and since then, June was nevertheless 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. Even so, economists expect a weak U.S. housing market to be a drag on U.S. economic recovery for much of the year.

Record-low mortgage rates stanch the bleeding

The lowest mortgage rates ever on record are what have made new home sales better than ever. Bloomberg reports that low mortgage rates are the only reason why the housing market has is better than it was with the recession that is the worst since 1930. However, increasing foreclosures are swelling the number of unsold existing homes, putting pressure on prices and keeping buyers on the sidelines as unemployment hovers near 10 percent and the economy cools. New home prices are nevertheless falling. From June 2009, the median price for new homes has decreased 0.6 percent to $ 213,400.

Economic recovery nevertheless dependant on U.S. housing market

Last year, 7 percent of the housing market was from new home sales. Taragana.com reports the number has gone down 15 percent from where it was before the housing crisis happened. Construction jobs are dropping with weak new home sales meaning the economic recovery can no longer be driven by the construction industry, which historically has been the driving force. Each new home built creates, on average, 3 jobs for a year and generates about $ 90,000 in taxes paid to local and federal authorities, according to the National Association of Home Builders. Many individuals feel the effect of this.

Find more information on this subject

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/