New Home Construction Sees Slight Drop in July

Sales of newly built, single-family homes held virtually unchanged in July with a 0.7 percent dip from the previous month to a seasonally adjusted annual rate of 298,000 units, according to newly released data from the U.S. Commerce Department. "The fact that new-home sales fell by less than one percent in July is an indication of how little conditions have changed in the housing market," said Bob Nielsen, chairman of the National Association of Home Builders (NAHB) and a home builder from Reno, Nev. "While new-home inventories are exceptionally thin, home builders are still competing with large numbers of foreclosed and distressed homes on the market and a climate of uncertainty in which consumers are reluctant to go forward with a major purchase for fear of what economic news tomorrow might bring." Regionally, new home sales recorded declines of 7.4 percent in the South and 5.9 percent in the West, but rose 2.4 percent in the Midwest and doubled (100 percent increase) in the Northeast from a record low number in the previous month. The inventory of new homes for sale in July fell to a 48-year record low of just 165,000 units, which represents a 6.6-month supply at the current sales pace. "The current nationwide inventory of completed new homes ready for occupancy—at 61,000 units—is in keeping with what a single major metropolitan area such as Atlanta might sell in a typical year,"  said NAHB Chief Economist David Crowe. "The sales pace of newly built, single-family homes in July was in line with what it has been over the last year, and this is in keeping with our forecast. While we expect to see some marginal gains in sales activity through the rest of 2011, we do not foresee any major advances until economic growth helps boost homebuyers' confidence."