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Delaying the Inevitable

Sales of newly constructed single-family homes spiked 11% in June to an annualized rate of 384,000 homes. The gain over May was much greater than expected. A consensus of housing industry analysts had forecast seasonally adjusted sales of 352,000. However, sales are still 21% below the levels of a...

By Jonathan D. Miller | Updated on July 27, 2009

“Sales of newly constructed single-family homes spiked 11% in June to an annualized rate of 384,000 homes. The gain over May was much greater than expected. A consensus of housing industry analysts had forecast seasonally adjusted sales of 352,000. However, sales are still 21% below the levels of a year ago (488,000). Four years ago, during the height of the housing boom, the sales rate for June was 1,374,000, nearly three-and-a-half times higher than last month.” Wire service reports 7/27/2008

Housing led us into the economic pit beginning its slump three years ago. Now it appears housing is bottoming out … finally. It´s good news if for no other reason that every day brings us closer to recovery. Hitting bottom usually delivers mixed messages and this time is no different. Homebuyers, who can afford to buy, signal that the time looks right to them. So, (a few) more people start to close on deals. Government mortgage incentives help and homebuilders continue to lower prices (down 3% from May´s median) albeit at a slowing rate, to entice more activity and move inventory. At the same time, foreclosures on existing homes continue to increase. That means more fire sales and auctions, which could lower prices further before we see a true firm up. It´s still not a time for homeowners to sell unless they have no other choice.

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