Erica Anne Cook B.P.H.E., B.A., B.Ed., Sales Representative
Gairdner and Diamond Award Winner

JOHNSTON & DANIEL A Division Of Royal LePage Real Estate Services Ltd., Brokerage

477 Mount Pleasant Road, Toronto, ON M4S 2L9

Cell: 416.903.3132

Office: 416.489.2121

Fax: 416.489.6297

Recent Update on US Market

August 28, 2012 - Updated: August 28, 2012

U.S. new home sales rose in July

  • New home sales rose by 3.6% in July to an annualized pace of 372K units, beating market expectations going into today’s report for an increase to 365K.
  • The inventory of unsold homes inched down to 142K from 143K in June which combined with the pickup in sales to push the months’ supply of unsold homes down to 4.6 from 4.8 in previous month.
  • Today’s better-than-expected new homes sales report rounds out another month of data on the housing market that broadly point to a continued uptrend in activity, with most indicators substantially above their year-ago levels. While the improvement in housing market conditions is a welcome development for the US economy, there has only been limited progress in retracing the sharp plunge seen during the economic downturn and activity remains at historically depressed levels.

Implications

Sales of new single-family homes in the U.S. rose by 3.6% in July to an annualized pace of 372K units, slightly higher than market expectations going into the report for rise to 365K. The level of sales in June was revised up to 359K annualized units from the initially reported 350K, however, this was offset by a downward revision to 372K in May from the previously reported 382K. On a regional basis, strength in new home sales in July was concentrated in the two smallest regions, with sales up 7.7% in the Midwest while sales in the Northeast surged 76.5% in the month to reverse the previous month’s 55.3% plunge. New home sales declined modestly in the South (-1.6%) and West (-0.9%) to provide a partial offset.

The number of new homes available for sale fell 0.7% to 142K from the downwardly revised 143K last month (initially reported as 144K), marking a new low absolute level of housing inventories for records dating back to 1963. At July’s pace of sales, it would take 4.6 months to clear this entire inventory of new homes, down from the revised 4.8 months in June (previously reported as 4.9). This matches the month’s supply of new homes seen in May that had represents the lowest level since October 2005. The median sales price for new homes was $224,200, 2.5% below its year-ago level, the second consecutive such decline following four straight increases from February to May.

Today’s better-than-expected new homes sales report rounds out another month of data on the housing market that broadly point to a continued uptrend in activity, with sales, starts, permits and homebuilder sentiment all substantially above their year-ago levels. While the improvement in housing market conditions is a welcome development for the US economy, there has only been limited progress in retracing the sharp plunge seen during the economic downturn and activity remains at historically depressed levels. We expect the recovery in the housing market to continue at a gradual pace over the forecast horizon though the sector will not likely be a significant contributor to overall economic growth and a return to pre-recession levels of activity is likely not in the cards for the foreseeable future.


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