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New Home Sales Soar 12.4 Percent in July 09-01-16 | News

New Home Sales Soar 12.4 Percent in July
Sales, Construction Surging in South Region

New single-family home sales in July were up 40% in the Northeast and 18.1% in the South. But the South region accounted for nearly 400,000 of the 654,000 new homes sold in the U.S. The Northeast recorded just 35,000 sales.

Sales of new single-family homes soared in July, compared to June, driven by strong gains in the South region.

The Census Bureau reports that sales jumped 12.4 percent month-over-month, and have surged 31.3 percent compared to July 2015.

Construction Dive said the pace of new home sales is the best since October 2007, and that it "walloped" the consensus estimate by economists.

A total of 654,000 new homes were sold in the U.S. in July, compared to 582,000 units in June. The South recorded 398,000 of those purchases, climbing from 337,000 units the previous month.

In comparison, the Northeast recorded just 35,000 sales in July, with 25,000 units sold in June. The Midwest recorded sales of 84,000 in July, and 83,000 units in June. The West posted sales of 137,000 units in each of those months.

On a percentage basis, however, the Northeast jumped 40 percent, the South is up 18.1 percent, the Midwest improved 1.2 percent, and the West was unchanged.

"Experts have attributed the unexpectedly strong growth in new sales to low mortgage rates and an improving job market," Construction Dive said.

The new home sales report complements other recent developments: housing starts rose 2.1 percent in July versus June; and builder confidence climbed two points in the Housing Market Index in August.

New home sales typically represent about 10 percent of all home sales each month.

The Wells Fargo Economics Group said strong job growth, low mortgage rates and increased construction brought buyers back in droves.

"Momentum is finally shifting back toward the new home market, particularly in the South, which has seen job growth surge this past year," said senior economists Mark Vitner and Anika R. Khan of the Wells Fargo Economics Group. "Sales through the first seven months of 2016 are up 12.4 percent from one year ago."

Construction Employment Jumps in July
After disappointing results from April through June, employment in the construction industry jumped in July with 14,000 net new jobs.

The building sector lost a total of 27,000 jobs in the three months preceding July, but has "rebounded strongly," the Associated Builders and Contractors reported about recent Bureau of Labor Statistics data.

Most of July's gain came from the nonresidential segment, which added 11,500 net new jobs. In contrast, the residential sector remained fairly static because it grew by only 700 new jobs. Heavy and civil engineering expanded by a modest 1,900 new jobs.

The latest development is "most welcome," said Anirban Basu, chief economist for the ABC. "If there is a slowdown in construction, it appears to be in residential as opposed to nonresidential activity."

Basu added: "Not only does the economy continue to add jobs, but labor force participation has begun to rise again. This should position America's ongoing consumer-led expansion to continue, creating demand for commercial construction and other forms of construction in the process."

U.S. Payrolls Grow By 255,000 Jobs in July
Across all sectors and industries, U.S. nonfarm payrolls expanded by 255,000 jobs in July, a "solid" rate of growth, the Wells Fargo Economics Group said.

The national unemployment rate remained unchanged at 4.9 percent, and payrolls have increased an average of 190,000 jobs a month over the last three months.

"This pace supports continued gains in consumer spending and housing, which should help sustain moderate economic growth at 2 percent," said John E. Silva, chief economist for the Wells Fargo Economics Group.