"Sales of newly built homes in the U.S. fell slightly in August as prices rose a record 11.2%, but demand remained at a two-year high.
Sales of new homes dipped to an annual rate of 373,000 in August from 374,000 in July, the Commerce Department said Wednesday. Yet the pace of sales in July, originally reported as 372,000, was the highest since April 2010. . . .
Although demand for new homes has been on the ascent — sales are up nearly 28% from one year ago — a huge jump in prices may have deterred some buyers last month.
The median sales price of a new home surged 11.2% last month to $256,900, the biggest one-month increase ever recorded. Prices have climbed 17% over the past year.
Prices of new and previously owned homes have been rising since the spring. Higher prices might even be drawing some people into the market who otherwise might have waited.
Yet the low stock of new homes might also have ratcheted up competition, spurring many buyers to increase their bids. The number of home available for sale in August remained at a record low 141,000.
Buyers were especially active in the Northeast, where sales shot up 20%. Sales also rose 1.8% in the Midwest and almost 1% in the West.
Sales fell 4.9% in the South, however, the region in which the real estate market has been generally strongest. . . .
By contrast, new-home sales averaged from 877,000 to 1.28 million annually in the six years before the 2007-2009 recession. If the economy were fully recovered, analysts say, sales of new homes could top 1.5 million a year.
The supply of new homes available for purchase on the U.S. market was unchanged at 4.5 months. The low level of inventory, growing demand and rising backlog of orders indicates builders are increasing construction, though sales could falter if the U.S. economy weakens.
So far there’s little evidence of that."
All the housing signals are pointing in the right direction, and that's an excellent sign that the U.S. economic recovery is likely to continue at a steady and uninterrupted pace.
That said, the fact that new home sales in 2011 were 306,000 compared to a "normalized" full recovery rate of 1.5 million means we have a very long way to go to get to a healthy housing market again.
Of course, that will take another several years for sure, but at least we're steadily making progress now and that's great to see.