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- New home sales increased by 26 percent from one year ago. It’s a further proof of the housing market strengthening. Amid stock market gyrations residential real estate appears a very safe place to invest particularly given the current housing shortage in America.
- Specifically, new home sales, which are not closings but rather contract signings on a newly constructed home, reached 507,000 annualized sales pace in July. Sales are up solidly from one year ago, yet only at about half the pace compared to the pre-recession levels when one million sales were the norm.
- The supply of new homes is on the tight side with only 5.2 months supply. More new homes can be constructed without worrying about excess supply.
- The median price of a newly constructed home was $285,900. It is no longer $300,000 and implying builders are putting some focus on constructing affordable homes. The price premium above the median existing home price is now 21 percent, which is still wider than normal.
- Many local communities are willing to authorize housing permits for multifamily apartments but less willing for condominiums or single-family homes. That’s a pity. There is strong demand and insufficient supply as evidenced by continuing gains in home prices in excess of income growth. This lack of new housing permits is partly contributing to homeownership rate falling to a 30-year low.
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