Even though the sales market is slow do to a low inventory, national sales are up. National sales are back to the 2007 level at 654,000 annual units. A 12.4 percent increase last month. Overall, the desire to purchase is exceeding the rate of new construction according to the most reecent Comerce Department report.
Just a 4.3 months' supply of new homes are available on the market, down from 5.2 months a year ago. Construction of single-family houses has picked up this year as the market has extended its recovery from the drop-off caused by the housing meltdown that began nearly a decade ago.
As the job market has strengthened and mortgage rates have settled near all-time lows, more buyers have been drawn to new developments and properties. Overall, existing-home sales reached a seasonally adjusted annual rate of 5.57 million in June, the best performance since early 2007.
Construction companies have added 215,000 jobs over the past 12 months. Over the same period, sales have risen 3.5 percent at building materials stores and 4.3 percent at furnishing stores, according to the government.
Purchases jumped up 40 percent in the Northeast and 18.1 percent in the South last month. They increased slightly in the Midwest and stayed unchanged in the West. July's median sales price dipped 0.5 percent from a year ago to $294,600, a possible reflection of the regional sales mix. So far this year, new-home sales have climbed 12.4 percent to 352,000.
Builders are increasing construction but are still running behind demand. Ground breakings for houses has climbed 10.6 percent year-to-date, the government reported last week. This marks a sharp reversal from prior years in the recovery from the Great Recession, when a large share of the increase in residential construction came from apartments.
Optimism abounds for many builders. The National Association of Home Builders/Wells Fargo builder sentiment index for August rose two points to 60 following a downwardly revised reading of 58 in July. Readings above 50 indicate more builders view sales conditions as good rather than poor.
Low mortgage rates are feeding much of this confidence. Mortgage buyer Freddie Mac said the average 30-year fixed-rate mortgage fell to 3.43 percent last week from 3.98 percent a year ago.
In totality the housing market is strong.
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