New single-family home sales took a notable upturn in July, with the month becoming the best month for new sales since 2007, according to HUD and the U.S. Census Bureau.
The HUD/Census report showed that July sales leapt 12.4 percent over June, which recorded 582,000 sales, and 31.3 percent above last July. The median sales price of new houses sold in July was $294,600; the average sales price was $355,800.
July’s numbers are the latest in a steady trend toward more new home sales overall, and some industry insiders think the trend is only going to continue.
“Expect greater stability in the next few months,” said Tian Liu, chief economist at Genworth Mortgage Insurance. “We see tremendous growth potential in new home sales as housing demand continues to grow and the continued supply shortage of newer vintage homes.”
Liu said that if anything will limit growth, it will be the limited supply of land and labor, and homebuilder’s focus on higher-price segments. Inventory shortage has been a drag on growth in many areas, particularly affecting new-to-market buyers who can’t compete with wealthier buyers in the bidding wars taking place.
Single-family home prices have been steadily appreciating since bottoming out a little more than four years ago—in fact, June 2016 marked the 50th consecutive month of year-over-year home price appreciation, according to the S&P CoreLogic Case-Shiller Indices for June.
The indices also offered a sign that price appreciation may be slowing. June marked the fifth consecutive month that year-over-year price appreciation was either flat or slower compared with the previous month. June’s national rate of appreciation was 5.1 percent, unchanged from May; the 10-city composite index posted an over-the-year increase of 4.3 percent in June, down from 4.4 percent in May; and the 20-city composite index reported a year-over-year increase of 5.1 percent in June, down from 5.3 percent in May.
“Though this is a sign that the U.S. housing market continues to stabilize, homebuyers are still being challenged as prices outpace income growth yet again,” Trulia Chief Economist Ralph McLaughlin said.
The Pacific Northwest experienced the strongest year-over-year price appreciation in June with more than 10 percent. Among the 20-city composite index, the three cities with the highest year-over-year price gains were Portland (12.6 percent), Seattle (11 percent), and Denver (9.2 percent). Even with the slower national appreciation, six out of the 20 cities reported greater year-over-year price appreciation in June than in May.
“Prices in last month’s three hot markets (Portland, Seattle, and Denver) continue to lead the pack with increases between 9.2 percent to 12.6 percent,” McLaughlin said. “Though Western markets dominate U.S. price growth, San Francisco continues to show a noticeable cooldown. Home prices in the City by the Bay increased of 6.4 percent, which is the smallest annual gain since August 2012. The continued slowdown suggests the San Francisco housing market might start looking more ‘normal’ by the end of the year, but the market still has a long way to go before most Bay Area homebuyers would agree.”
The latest Case-Shiller report is release on Tuesday, September 27.
Source – DS NEWS
The new home sales report for August will be released on Monday, September 26 and the question remains whether or not this upturn will continue.