Here comes housing—again. On Wednesday the National Association of Realtors reported that existing-home sales rose in July—up 2.3 percent from June and up 10.4 percent from July 2011. On Thursday the Census Bureau reported that new-homes sales were up by a much more significant margin.
Sales came in at an annual rate of 372,000. That’s up 3.6 percent from June’s total of a 359,000 annual rate (which itself was revised upward from the initial report of a 350,000 rate). More important, the July 2012 figure was up a whopping 25.3 percent from the July 2011 figure. In fact, through the first seven months of this year, new-homes sales are up 21 percent from the first seven months of 2011.
While new-home sales are still far below their bubble-era peak—back in the golden years of 2005 and 2006, new home sales topped 1 million—something is clearly happening. The pace of activity is rising. Inventory is falling. At the end of July there were only 142,000 completed new homes for sale. That’s down from 165,000 in July 2011, a 14 percent decline. For each of the past 12 months, the inventory of available homes for sale has declined, while the pace of sales has been rising. At the current rate of sales there are only 4.6 months’ worth of new supply on the market; a year ago, there were 6.7 months’ worth.
Clearly low mortgage rates are helping. So too are low prices. Builders have pulled in their horns. They’re building more modest homes, and in many cases they are building on lots they picked up for peanuts after the bust. Which means they can keep prices down while still turning a profit. The typical new home sold in July cost $224,200. That’s actually down from a year ago.
Month after month, even as skeptics point out that foreclosures continue and home values remain far below their peak, a steady accumulation of data is moving charts in the right direction. This year will likely go down as the first year since 2006 in which sales of new and existing homes rose and in which values bumped up.