Adding to Worries, New Home Sales Drop in July

Marking a third consecutive month, new home sales fell over July, the ""Commerce Department"":http://www.commerce.gov/ reported Tuesday. The drop in new home sales reflects still-weakening consumer confidence as new fears about a global economic slowdown continued to rattle stocks and markets worldwide.

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According to a ""Census Bureau"":http://www.census.gov/ ""release"":http://www.census.gov/const/newressales.pdf covering new residential sales, new single-family house sales dipped to a seasonally adjusted annual rate of 298,000 over July, reflecting a downward shift in estimates that fixed these numbers at a 0.7 percent decline from 300,000 homes sold over June.

Seeing an increase, the median sales price of new homes sold over July amounted to $222,000, contrasting with $272,300 in sales figures over the same month.

Meanwhile, the seasonally adjusted estimate for new houses on sale over July leveled out at 165,000, according to government data, reflecting a 6.6-month supply at existing rates.

In a report, research firm ""Capital Economics"":http://www.capitaleconomics.com/ signaled that the number of new homes fell 10 percent below previous levels over the same period last year.

It said that revisions over July would have shown a plunge by sales to 7 percent month-over-month, hitting 279,000, a record low.

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""This shows that the recent economic slowdown, rebound in the unemployment rate and fall in consumer confidence has more than offset any boost from lower mortgage rates to put a dent in households' ability and willingness to buy,"" Paul Dales, a U.S. senior economist with the firm, wrote in a U.S. Data Housing Response. ""Even if the economy were to avoid another recession, a prolonged period of weak economic growth will mean that there will be no real recovery in home sales for a few years yet.""

├â┬ó├óÔÇÜ┬¼├àÔÇ£There is no upside momentum at all in housing,├â┬ó├óÔÇÜ┬¼├é┬Ø ""_Bloomberg News_"":http://www.bloomberg.com/news/2011-08-23/u-s-new-home-sales-fell-in-july-to-lowest-level-in-five-months.html quoted Eric Green, chief market economist with ""TD Securities Inc."":http://www.tdsecurities.com/tds/content/HomePageTemplate?command=doHome, as saying. ├â┬ó├óÔÇÜ┬¼├àÔÇ£Without any meaningful job growth, we├â┬ó├óÔÇÜ┬¼├óÔÇ×┬óre going to continue to look at a housing sectors that is moribund.├â┬ó├óÔÇÜ┬¼├é┬Ø

In the report, he added that a ""surge in homebuilding won't happen until demand recovers, which is not on the horizon. The upshot is that the state of the housing market will continue to undermine the wider economy both this year and the next.""

Not all parts of the country registered dips in new home sales. From its place in Massachusetts, the Warren Group said that single-family homes had risen in the Bay State. According to a release, some 3,847 single-family homes statewide underwent the purchase process, jumping up from 3,590 over the same period from 2010, the year of the federal homebuyer tax credit, and pushing back a trend of year-over-year decreases.

""While it's encouraging to see sales rise in July, we're comparing statistics to a very rough month of July last year,"" said Cory S. Hopkins, managing editor of Banker & Tradesman, a publication made available by the Group. ""The expiration of the homebuyer tax credits hurt sales volume a year ago, which is skewing the actual picture of the market now.""

Nonetheless, analysts predict continued pains for housing as overall economic doldrums persist.

""The incoming news have really confirmed that the economy is really in a very weak state, and the hopes that this would be a short, temporary slowdown seems to be fading by the day,"" Dales tells _MReport_. ""It seems like it's here to stay for sometime.""