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Published: Wed, August 24, 2016
Economy | By Melissa Porter

Ahead of the Bell: US new-home sales

Ahead of the Bell: US new-home sales

"The growing number of lower-price level sales may reflect the growing importance of new-entry millennials as well as builders recognizing the need to downsize homes to actually sell them", says Joel Naroff, president of Naroff Economic Advisors. But sales remain 31.3% higher when compared with the same period a year ago.

"New homes are being purchased at a furious pace, and it could give the housing market the added push it's been waiting for", says Quicken Loans vice president Bill Banfield.

The report said new home sales jumped 12.4 percent to an annual rate of 654,000 in July from the revised June rate of 582,000.

Readings above 50 indicate more builders view sales conditions as good rather than poor. Last month, the inventory of new homes on the market fell 2.9 per cent to 233,000 units, the lowest level since November past year.

The sales of new single-family houses in June were at a seasonally adjusted annual rate of 654,000, 12.4 percent above the revised June level, and 31.3 percent above the same period past year, the Commerce Department said Tuesday. But a tight supply of new home options naturally restricts the country's homeownership rate, which in the second quarter of the year plunged to its lowest rate since the mid-1960s.

New home sales in the USA rose sharply last month to their highest level in almost nine years, as the housing market showed continuing strength that could augur well for economic growth in the third quarter.

That exceeded the most optimistic forecast in a Bloomberg survey.

The median price of a new home was $294,600 in July, which was up just marginally from the level a year earlier. Ground breakings for houses have climbed 10.6 percent year-to-date, the government reported last week. Relatively few listings of existing homes on the market have steered more would be-be buyers into newly built houses. Mortgage buyer Freddie Mac said the average 30-year fixed-rate mortgage fell to 3.43% last week from 3.98% a year ago.

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