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In June, new home sales went up from the record low they were in May. Ever since the end of the homebuyers tax credit, new home sales have gone down a lot which makes June nevertheless the second lowest on record. Many think the post-tax-credit slump is apparently getting over with. Many think this is not really positive news when considering the high U.S. unemployment rate and foreclosures nevertheless happening. Post resource – New home sales jump in June to exceed record-low expectations by Personal Money Store.

New home sales beat forecast, but that’s not saying much

The annual rate for units in May was 267,000 when it jumped in June 22.6 percent to 330,000 reported the Commerce Department on Monday. CNBC reports the pace of new home sales in June was nevertheless the second lowest since records started being kept in 1963. However, the percentage increase was the largest increase since May 1980, and partially offset the historic 36.7 percent decline in May. All year, there is an expectation from economists for the U.S. housing market to stay quite low.

Record low mortgage rates make things worse

The lowest mortgage rates ever on record are what have made new home sales better than ever. Bloomberg reports that low mortgage rates are the only reason why the housing market has is better than it was with the recession that is the worst since 1930. However, increasing foreclosures are swelling the number of unsold existing homes, putting pressure on prices and keeping buyers on the sidelines as unemployment hovers near 10 percent and also the economy cools. New home prices are continuing to get lower and lower. The median price for new home sales decreased 0.6 percent from June 2009 to $ 213,400.

U.S. housing market continues to drag on economic recovery

New homes sales made up about 7 percent of the U.S. housing market last year. the number is down 15 percent from before the housing crisis, reports Taragana.com. Construction jobs are dropping with weak new home sales meaning the economic recovery can no longer be driven by the construction industry, which historically has been the driving force. Each and every home that is built gives three new jobs and $ 90,000 in taxes to the government. The effect is felt across multiple industries.

Sources for the article

CNBC

cnbc.com/id/38412228

Bloomberg

bloomberg.com/news/2010-07-26/sales-of-u-s-new-houses-climb-to-330-000-more-than-economists-forecasts.html

Taragana.com

blog.taragana.com/business/2010/07/26/new-us-home-sales-in-june-tick-up-slightly-but-remain-low-as-demand-for-housing-slumps-82763/

Tags: economic recovery, mortgage rates, new home sales, us housing market

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