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Report: New-Home Sales Limp Over June

Fewer homebuyers purchased new single-family homes over June, the ""Census Bureau"":http://www.census.gov/ and ""HUD"":http://www.hud.gov/ reported Tuesday, with sales falling to an annual rate of 312,000 from 315,000 the previous month. Economists say these numbers nonetheless reflect progress from February, when single-family sales hit a record low, while others point to a slowly vanishing foreclosure fleet.

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The ""report"":http://www.census.gov/const/newressales.pdf held that June sales amounted to 1.0 percent, plus or minus 12.5 percent, beneath revised May estimates, still 1.6 percent over June 2010 estimates. Seasonally adjusted numbers for new homes for sale totaled 164,000, which will take over six months to process at current rates.

Meanwhile, median sales prices for new homes taken off the market last month came out to $235,200, shy of the average $269,000 sales price. Albeit sluggish, the new numbers represent a promising trend away from the low in February reached by single-family home sales, which plummeted to an annual rate of 278,000.

According to ""CNN"":http://money.cnn.com/2011/07/26/news/economy/new_home_sales/, homebuilders, their sights on high unemployment numbers, remain wary of new construction activity. Foreclosures continue to compete with buyers and builders by hamstringing banks with REO-heavy ledgers and swaying buyers from new home purchases.

In a ""statement"":http://www.nahb.org/news_details.aspx?newsID=13130, Reno-based homebuilder Bob Nielsen, chairman of the ""National Association of Home Builders"":http://www.nahb.org/ (NAHB), said, ""Today's report shows that new-home sales remain in a holding pattern at relatively low levels. This reflects what we are hearing from builders in the field, who continue to see uncertainty in the marketplace and are reacting accordingly by keeping inventories at a record low.

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""With inventories at razor-thin margins, any uptick in demand will generate increased building activity in the months ahead,"" he said.

""June's sales numbers illustrate how the fledgling housing and economic recovery go hand-in-hand,"" added Robert Denk, NAHB senior economist. ""Improving confidence in the broader economic recovery -- in particular, solid job growth -- will bring buyers back into the housing market. But as policymakers debate major changes to the housing finance system, higher downpayment [sic] requirements, reducing conforming loan limits and whether to tamper with the mortgage interest deduction, this only fuels consumer uncertainty and keeps the housing market recovery from gaining any real momentum.""

Michael Montgomery, U.S. economist at ""IHS Global Insight"":http://global.ihs.com/, offered up slightly more positive projections in a statement on the numbers. He called declines in single-family home sales and overall homebuilding activity indications that a rebound may be around the corner for housing.

""If sales are exactly as in the past year, and starts and completions exactly match the past year's total, then the number of new homes for sale will plunge by another 47,000 units to 117,000,"" he said. ""In purely mathematical terms, something hast to give, and construction/starts will be the item that pops up├â┬ó├óÔÇÜ┬¼├é┬ª. Further fuel is added by sales firming a bit over broader than one-month spans.""

Montgomery added: ""Don't pop the cork yet, however. The dreary sales and dismal starts are chewing up the inventory, but more needs to be chewed up before the turn around turns into that surge. That means not today, probably not this month, and maybe not this quarter. The sales are the key and the surge turns into a torrent only if the sales firm or much more time passes.

""This is not the turn in housing, but the drivers are finally reaching for the turn signal,"" he said.

The Census Bureau arrived at the new numbers by extracting a 900-member sample from 20,000 permit building offices around the country, according to Erica Filipek, the Census Bureau's assistant chief for construction statistics. She said that one in 50 permits made it into the report.

Sales reflect the number of contracts signed by new homebuyers rather than newly built homes, Filipek adds.

About Author: Ryan Schuette

Ryan Schuette is a journalist, cartoonist, and social entrepreneur with several years of experience in real-estate news, international reporting, and business management. He currently lives in the Washington, D.C., area, where he freelances for DS News and MReport.
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