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July New Home Sales Increase as Prices Fall

New-home sales regained all the ground they lost in June, jumping by 13,000 to an annualized rate of 372,000 in July, the ""Census Bureau"":http://www.census.gov/ and ""HUD"":http://portal.hud.gov/hudportal/HUD reported Thursday.


Economists surveyed by Bloomberg expected the report to show a sales pace of 362,000. Sales for June were revised up to 359,000 from the originally reported 350,000.

Both the median and average sales price of a new home though dropped month-over-month and year-over-year according to the report, each falling to the lowest level since January.

The bump in sales was seen largely in the Northeast where the sales pace was reported as 30,000 up from 17,000 in June. In May the sales pace in the Northeast was 38,000.

Given the wide swings in the region, the average of national sales might be a better indicator. The three-month average of sales was 368,000 up from 359,000 in the previous three months and 303,000 in the May-June-July period one year ago.

The month-over-month improvement in sales nationally was nonetheless the ninth in the last year hinting at a sustainable recovery and supporting surveys showing increasing builder confidence.

The ""National Association of Home Builder's"":http://www.nahb.org/ Housing Market Index measure of builder confidence reached 35 (out of 100) in July, more than double the reading of 15 registered one year earlier.

The measure of buyer traffic to showrooms and model homes ├â┬ó├óÔÇÜ┬¼├óÔé¼┼ô part of the HAB survey, rose to 28 in July, more than double the reading of 15 in July 2011.

Builders though are still selling far fewer homes than they complete. According to a separate report, builders completed 448,000 new-single family homes in July.


Nonetheless, the inventory of homes for sale at the end of July dipped slightly to 142,000 from 143,000 in June.

With the increase in the sales rate, the months' supply of new homes for sale dropped to 4.6 from 4.8 in June. The inventory is at the lowest level since this report began in January 1963.

The sales pace, according to the report, is up 25.3 percent from one year ago.

The drop in the median price to $224,200 - was the fourth in the last five months, bringing the median price to its lowest level since January.

The median price was down 2.5 percent from one year ago, the second straight month of year-over-year decline.

The average price fell month-over-month for the third straight time. The average price dropped to $263,200, its lowest level of the year.

The average price also fell year-over-year for the second straight month.

The July new home sales report followed by one day a report by the ""National Association of Realtors"":http://www.realtor.org/, which showed a modest increase in new-home sales, which had fallen to an eight month low in June.

The two reports are not strictly comparable since the new-home sales data is based on contracts and the existing-home sales report tracks completed (closed) transactions.

Nonetheless, the two reports are often read together to measure the strength of the housing sector.

The new-home sales report is a more current indicator of housing conditions since it reflects the economy and consumer confidence for the month of the report.

It does not though take into account transactions which are cancelled.

About 28 percent of new homes sold in July carried prices of $200,000 or more, down from 29 percent in June, the third straight month-over-month decline in sales of higher-priced homes.

Sales rose sharply in the Northeast, reversing an abrupt decline. According to the report, the sales pace in the Northeast in July was 30,000, up from 17,000 in June.

In May, the sales pace was 38,000. Sales rose 4,000 in the Midwest but fell 3,000 in the South and 1,000 in the West.

About Author: Mark Lieberman

Mark Lieberman is the former Senior Economist at Fox Business Network. He is now Managing Director and Senior Economist at Economics Analytics Research. He can be heard each Friday on The Morning Briefing on POTUS on Sirius-XM Radio 124.

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