The HUD/Census report showed that July sales leapt 12.4 percent over June, which recorded 582,000 sales, and 31.3 percent above last July. The median sales price of new houses sold in July was $294,600; the average sales price was $355,800.
July’s numbers are the latest in a steady trend toward more new home sales overall, and some industry insiders think the trend is only going to continue.
“Expect greater stability in the next few months,” said Tian Liu, chief economist at Genworth Mortgage Insurance. “We see tremendous growth potential in new home sales as housing demand continues to grow and the continued supply shortage of newer vintage homes.”
Liu said that if anything will limit growth, it will be the limited supply of land and labor, and homebuilder’s focus on higher-price segments. Inventory shortage has been a drag on growth in many areas, particularly affecting new-to-market buyers who can’t compete with wealthier buyers in the bidding wars taking place.
The seasonally adjusted estimate of new houses for sale at the end of July was 233,000. This represents a supply of 4.3 months at the current sales rate.
Shortage in construction labor aside, the low unemployment rate, currently just under 5 percent, gives Trulia chief economist Ralph McLaughlin hope that July’s numbers are a sign that demand for new homes remains solid.
“July’s surge in new home sales continues to support the sentiment that demand for homes is strong despite homebuyers facing low existing inventory,” McLaughlin said. “July shows the 12-month rolling total of new homes sales was the best in eight years and boosts sales to 82 percent of the 50-year norm.”
This, of course, is based on taking for granted that the HUD/Census numbers for July were accurate, which McLaughlin cautioned against just yet.
“It’s important to note that new home sales numbers from the U.S. Census are extremely volatile,” he said. “The margin of error is wide and often includes zero, which means we can't be certain whether these month-over-month or year-over-year changes actually increased, decreased, or stayed flat.”
He added, however, July’s numbers are a rare case where the year-over-year change is statistically significant, indicating that the surge in sales “can be taken with more than just a grain of salt.”