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Home-Selling Markets Climb in July09-08-15 | News

Home-Selling Markets Climb in July
Existing, New Home Sales Post Gains

Sales of new homes expanded by nearly 26 percent in July on a year-to-year basis, while the Pending Homes Sales Index, an indicator of existing home sales, is up 7.4 percent on an annual basis.

Both the existing and new home sales markets put up solid numbers in the month of July.

The National Association of Home Builders cited Census Bureau data when reporting that new-home sales rose 5.4 percent in July, compared to June, and an impressive 25.8 percent year-to-year.

As for homes already built, the Pending Home Sales Index, maintained by the National Association of Realtors, increased in July for the sixth time in seven months, the NAHB said.

The PHSI improved 0.5 percent in July month-to-month, and was up 7.4 percent compared on an annual basis. For completed transactions, existing home sales increased for the third consecutive month in July, and remained at the highest level since February 2007, the NAHB said.

However, the share of first-time buyers fell to 28 percent, the lowest level since January.

Median prices of new homes increased 2 percent from July 2014, while average prices climbed 4.8 percent. First time buyers appear to be shying away from the market, as the majority of the buyers are people who already own homes and are moving up, the NAHB said.

New home inventories increased in July to 218,000 units, the highest level in more than five years. Some foreign financial markets are in turmoil, but second-quarter growth in the U.S. gross domestic product came in at a very strong 3.7 percent, even though this remains an estimate by the Bureau of Economic Analysis. The GDP growth rate was revised upward from 2.3 percent.

Construction is contributing greatly to the U.S. economic expansion. Total private residential construction spending in July jumped to $387 billion. Multifamily spending was 21.2 percent higher in July, compared to July 2014. Spending on single-family homes was up 15.8 percent on an annual basis.

Builders of multifamily housing projects have expressed optimism about their market going forward. The NAHB's Multifamily Production Index improved one point to 55 in the second quarter. This is the 14th consecutive quarter that the MPI has been at 50 or better. The MPI measures builder and developer sentiment on a scale of 0 to 100. Any number above 50 is a sign that more respondents believe conditions are improving, as opposed to getting worse.

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The NAHB said recent spikes in construction spending have been driven, in large part, by the multifamily housing sector. But it appears the pace of multifamily spending is gradually slowing. The NAHB also said it expects the single-family sector to increase spending in 2015.

In the nonresidential construction category, total spending increased 0.5 percent in July month-to-month, and 12.7 percent compared to July 2014. Manufacturing led the overall gain with a sector increase of 73 percent. Lodging followed with a 40 percent hike, and amusement/recreation was next with a 34 percent jump.

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