With the economy in the doldrums, an ongoing mortgage crisis, and worries over recession, few analysts expected sales of new homes to rise in the last quarter. But surprisingly, there was a 2.7% increase nationally in the sale of new homes in September. Meanwhile, the median price of a new home dropped to its lowest level in more than four years.
The new statistics, revealed in a press release Monday by the United States Department of Commerce, showed that 464,000 single-family new homes were sold in September, compared to 452,000 in August, a statistically significant jump in sales, and a surprising turn of events that could help reassure consumers and investors about the resiliency of the US economy.
But the news is not all rosy. The 2.7% national increase in new-home sales is still far below the 694,000 sales reported in September of 2007. Overall though, many real estate experts and market analysts see the slight upturn as reason to be cautiously optimistic about the state of the US housing market, and the economy in general.
There is speculation that the upturn in sales is being fueled by declining real estate prices. In other words, buyers are keen to get a bargain so long as the economy remains stagnant. This seems likely when you consider the data; the median price for a new home has dropped roughly 12% from the same time last year, making many new homes quite a bargain. Those who buy now will likely get a good deal, and capitalize on the general economic insecurity and lower demand for new homes.
The biggest increase in home sales occurred in the Western states, where 23% surges were seen in some areas of California and Nevada. Sales in the northeast, however, continued to fall, and the area recorded the lowest number of new homes sales in 35 years.
Overall, the housing market is still in a pretty deep trench, but there may be optimistic swings in certain areas of the country, particularly the Southeast and Southwest. And while government analysts do not put a great deal of credence into these types of monthly reports, the news was welcomed by Wall Street, and appeared to offer a degree of confidence to investors in the housing market.
Currently, the median selling price for a new home in the United States is $218,000. Lower real estate prices are bringing out bargain hunters who expect real estate prices to eventually return to pre-recession levels or higher.
Well..increase is a goodword.. Sure the prices are lower, but as sales increase so will the prices…The old supply and demand rule…Lets hope this keeps up..Good news is rare these days.
Comment by carol stanley — November 3, 2008 @ 6:53 am