New home sales up, but sales remain slow

Posted July 26, 2010

— Sales of new homes jumped last month compared with May, but it was the second-weakest month on record. The lackluster economy has made potential buyers skittish about shopping for homes.

New home sales rose nearly 24 percent in June to a seasonally adjusted annual sales pace of 330,000, the Commerce Department said Monday. May's number was revised downward to a rate of 267,000, the slowest pace on record dating to 1963. Sales for April and March were also revised downward.

In North Carolina, sales of new homes rose only 4 percent from May, but sales were up 17 percent over June 2009. All regions of the state, except for the Outer Banks, Charlotte, Brevard and Hickory posted higher June sales, according to figures from the North Carolina Association of Realtors.

Sales of new and existing homes in the Triangle in June were up 7 percent from May and 21 percent from a year ago. In both Fayetteville and Pinehurst, new home sales rose 9 percent from May, and sales jumped by 15 percent in Rocky Mount and skyrocketed by 45 percent in Goldsboro.

High unemployment, low job growth, and tight credit have kept people from buying homes. The industry received a boost this spring when the government offered tax credits to homebuyers. But since they expired in April, the number of people looking to buy has dropped, even with the lowest mortgage rates in decades available.

"There's no question that this is a weak number, but it seems to be more stable," said Stuart Hoffman, chief economist at PNC Financial Services Group. "The bottom line to all of this is that we need more jobs."

Sales are down 72 percent from their peak annual rate of 1.39 million in July 2005. More than 600,000 new homes were sold annually from 1983 through 2007. After the housing bubble popped, sales plunged to 375,000 last year. That was the weakest yearly total on record.

New homes sales made up about 7 percent of the housing market last year. That's down from about 15 percent before the bust.

For sale signs, home sale Buyers, sellers optimistic about Triangle housing market

Home sale prices appear to have stabilized in North Carolina, with the average sales price in June up 1 percent from a year ago. Total sales volume, in dollars, was up 9 percent from May and 17 percent from June 2009.

In the Triangle, the average home sold for almost $240,700 in June. Statewide, the average sale price was $212,600.

"The sales in this community have been increasing, as well as the traffic we see for potential buyers," said Rex Osborne, who represents York Simpson Underwood Realty in the Villages of Apex development.

Osborne said three houses have been purchased in the development in the last 10 days. He said buyers want reasonably priced homes with modern amenities.

"It's possibly that the home is smaller than they're used to, more efficient than what they're used to," he said.

Devorah Ungerleider-Moore said she and her family moved from California to Apex four months ago, and they couldn't believe what they got for their money in the Triangle housing market.

"Once our son is asleep, we're sitting down in the living room, and we look around and say, 'Is this really ours?'" she said.

Each new home built creates, on average, the equivalent of three jobs for a year and generates about $90,000 in taxes paid to local and federal authorities, according to the National Association of Home Builders. The impact is felt across multiple industries.

Builders have sharply scaled back construction in the face of a severe housing market bust. The number of new homes up for sale nationwide in March fell 1.4 percent to 210,000, the lowest level in nearly 42 years.

Due to the sluggish sales pace, it would take eight months to exhaust that supply. That's above a healthy level of about six months.

Molli Bot said she and her husband put a relatively low sale price on her house, at 200 Sylvan Grove Drive in Cary's Lochmere neighborhood, because more than 50 other homes in the subdivision also are on the market.

"We've done everything that needs to be done. It's move-in condition," said Bot, who is selling the house herself. "We're confident that the house will sell. It's real pretty inside, real pretty outside, a great neighborhood. Everybody knows this neighborhood."

The median sales price on new homes nationwide in June was $213,400. That was down 0.6 percent from a year earlier and down 1.4 percent from May.

New home sales rose by 46 percent in the Northeast, 33 percent in the South and 21 percent in the Midwest. The West posted a decline of nearly 7 percent.

"One month doesn't make a trend and the roadblocks to a healthy housing market are high, the most important one being the still-high jobless rate," wrote BMO Capital Markets economist Jennifer Lee in a note to clients. "But with borrowing costs at record lows, prices also remaining low, those with jobs who can afford a home may be enticed."


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  • Peace Love and Cold Meds Jul 26, 2010

    realtors, please goole, REALITY,
    and then try to find some.
    You guys have no rights to sell anything when you do not disclose the truth about your school system!

  • dscienceguy Jul 26, 2010

    Plenty Coups, I did not wish to turn a housing discussion into a healthcare discussion. Okay, you are correct about the 40%. Similar results? The difference between the haves and have-nots in terms of healthcare is increasing just like here. The system is moving toward having the doctors/medical staff make decisions. The system is decentralizing to reduce cost also, the opposite of what the U.S. is doing. People are to be wait-listed more frequently for what you would call elective surgery. As an example if you are having knee problems and do not get replacement surgery, how would you feel to be pain for months on end? You are correct that the plan passed last year will not reduce costs. The abusive practices were more anecdotal rather than systematic if you look.

  • Caveman93 Jul 26, 2010

    If anyone actually belives that the housing market is "improving" you will be sorely suprised soon. Mark my words.

  • yankee1 Jul 26, 2010

    While unemployment continues, foreclosures increase, home sales slow, and misery increase4s, here is the agenda for the POTUS and his family over the next few month:
    Michelle Obama, daughter Sasha to vacation separately in Spain -- over president's birthday...

    30 rooms at 5-star hotel...

    The Ritz?...

    5-day trip to follow weekend on FL's Gulf Coast, precede 10-day vacation on Martha's Vineyard...

    Another in your face moment for the most liberal POTUS in American history. Be proud liberals. He's YOUR President and he's laughing at all of you! Those of us who knew what he was are laughing at you too!

  • Plenty Coups Jul 26, 2010

    dscienceguy-"Please Google "Britain health care system" and note the changes it is undergoing because of cost."

    You're oversimplifying why Britain's restructuring their health care system. Yes, they're trying to save money but they still only pay 40% of what we pay and get similar results. Their restructuring is basically trying to get their care more patient centered. They love their health care over there and would never consider ending the overall public aspect of it. We have the most expensive health care system in the world and we recently passed a watered down plan that probably won't reduce costs but will stop insurance companies from abusive practices.

  • ykm Jul 26, 2010

    feespeech if you are seeing growth in the economy, how much does it have to grow before government subsidies can stop. I wonder if you have any idea how much money has been borrowed and where it has been spent. I will give you a clue, 3.3 trillion in tarp, stimuless and other gov bailouts and programs. 2.38 trillion in federal gov revenue. Then you have to add in 1 trillion we have lost in Freddie and Fannie. That's just a start. The total allocation for tarp, bailouts and other gov programs is 11 trillion dollars. Budget deficits are projected to be another 1.5 trillion next year. All this money being spent and what did we get, a few more people in restaurants and some buildings. Pretty hefty price tag don't ya think.

  • GWALLY Jul 26, 2010

    ..."But Nancy, Harry, liberal, democrat, or fake rev didnt make the comments. You did. How about standing behind your statements. Otherwise, it's just stirring up lies and mis-truths.freespeech..."

    Oh yes they did...(and if you got your news from someplace other than MSNBC you would know that)....and so did your messiah and the (fake) rev-a-runds......."obama's health care plan will reduce costs and reduce the uninsured in this country by 90% and not cost the taxpayer a dime"...!!!!...baaaaaaahhhh says the sheep...ROFLMBOAU

  • dscienceguy Jul 26, 2010

    And that was "preventive" not "preventative". I apparently created a new word.

  • Peace Love and Cold Meds Jul 26, 2010

    The legend of Meeker and team. Don't dare make growth pay for itself, ruin the school system and make it hard on the poor realtors to sell their gifts to the world. Homes aren't selling a bit, NOT ONE, anywhere around that I've seen. Good luck with that farce.

  • dscienceguy Jul 26, 2010

    Freespeech, please Google "Free preventative health care" and you should see this has been put on the table which will cost someone money to do. Please Google "Britain health care system" and note the changes it is undergoing because of cost. Which middle class tax cuts are you wanting to keep? Not implementing them will cost $2.2 trillion over the next ten years. You may send in your extra taxes now if you so desire. Oh, please Google "Steny Hoyer comments on tax cuts" to see that he felt like lowering the limit to where they start.