Is the housing market on the rebound?
The U.S. Census Bureau and the Department of Housing and Urban Development announced Monday that sales of new homes increased 7.6 percent in May to a seasonally adjusted annual rate of 369,000—a two-yearhigh. This is 19.8 percent above the May 2011 estimate of 308,000
The median sales price of new homes sold in May was $234,500; the average sales price was $273,900, the report stated. The seasonally adjusted estimate of new houses for sale at the end of May was 145,000, a supply of 4.7 months at the current sales rate.
This encouraging news for the housing market follows last week’s National Association of Realtors report that while the pace of existing home sales dipped in May, they were substantially higher than a year ago. The monthly S&P/Case Shiller home price index, which tracks the residential real estate values in 20 U.S. metropolitan regions, will be released Tuesday.
Another report last week found that home builders applied in May for permits to build new homes at the highest rate in almost four years.
While new homes represent less than 20 percent of the housing market, they are considered a barometer of how the economy is progressing. According to the NAR, three new jobs are created for each new single-family home that is built. The NAR also estimates that each new single-family home generates a total of $90,000 in government revenue -- $67,000 in federal taxes and $23,000 in state and local taxes.
On the plus side for the housing market, mortgage rates are at unprecedented lows, and home prices are stabilizing. Still, the housing market has a ways to go before it can truly put out the welcome mat. Analysts say that 700,000 new homes is the benchmark for healthy annual sales, the Associated Press notes.
Donald Liebenson writes news and features for Millionaire Corner. He has been published in the Chicago Tribune, The Chicago Sun-Times, The Los Angeles Times, Fiscal Times, Entertainment Weekly, Huffington Post, and other outlets. He has also served as a marketing writer for Chicago-based Questar Entertainment and distributor Baker & Taylor.
A graduate of the University of Southern California, he is married with a college-age son. He also writes extensively about entertainment.