New-home sales disappointby Tim Manni
Just days after the National Association of Realtors reported strong gains in existing home sales, a joint release by the U.S. Census Bureau and the Department of Housing and Urban Development revealed a steep decline in new-home sales.
The Census Bureau reported Friday that new-home sales in July were down 13.4 percent from June, yet still 6.8 percent above year-ago levels. Adding to the bad news, the June figures were revised downward.
The median price of new homes sold in July was $257,200, while the average sales price was $322,700.
Builders are confident…for the moment
It will be interesting to see how rising mortgage rates influence home sales in the months ahead. Right now, I believe many of the stronger home sales figures have been greased by the surge in rates we saw a few months back. Motivated buyers decided to act before mortgage rates rose further.
In fact, the Home Builders said as much earlier this month.
“Builders are seeing more motivated buyers walk through their doors than they have in quite some time,” Rick Judson, NAHB chairman and a home builder from Charlotte, N.C., said in a statement. “What’s more, firming home prices and thinning inventories of homes for sale are contributing to an increased sense of urgency among those who are in the market.”
Will home sales tank in the months ahead?
The Federal Reserve, as far as anyone can tell, plans to move forward with reducing their purchases of mortgage bonds come September. Only time will tell how the Fed’s moves will ultimately impact mortgage rates. Has the impact of the Fed’s actions already been fully felt by the markets, or are we in for another surge in rates come September?
I wouldn’t be surprised if we see a steady decline in home sales in the remaining months of the year, especially if rising mortgage rates become a permanent fixture.