July New Home Sales Highest In Nearly Nine Years
According to the latest Commerce Department data, July new home sales rose 12.4% from June to a seasonally adjusted annual rate of 654,000. This represents a 31.3% increase from July 2015, USA Today notes. The houses had a median sale price of $294,600 and an average sale price of $355,800 in July. Trulia chief economist Ralph McLaughlin said, “The year-over-year change is statistically significant, indicating the surge in sales can be taken with more than just a grain of salt.” Neil Irwin, in the New York Times “Upshot” blog, writes that, after “an excruciatingly long time,” the housing market “seems to be solidly on the mend” due homebuilders producing more starter houses for millenials. With the median sale price for new homes falling to $294,600 from $310,500 in June, Zillow chief economist Svenja Gudell wrote in an email, “The dip in price will be welcome relief to buyers struggling to find affordable inventory in this incredibly tight market.” Reuters urges caution, however, noting that July’s increase is likely an exaggeration of how strong the housing market may actually be, as there hasn’t been a “robust” increase in housing starts to match data showing increases in home sales. This may indicate that the market is tightening, which could further drive up housing costs.
What This Means For Small Businesses
The latest new home sales data is a welcome bright spot given the uncertainty of the economy, and the turbulence of the housing market, following the recession. Still, small businesses that deal with the housing market need more than a month of housing gains to generate greater confidence that a sustainable economic recovery is happening.
Additional Reading
The Wall Street Journal also covers this story.
Note: this article is intended to keep small business owners up on the latest news. It does not necessarily represent the policy stances of NFIB.
