New Homes Sales Surge 11% in June - Wash Post

Washington Post Staff Writer
Monday, July 27, 2009; 1:13 PM

New homes sales surged in June to their highest rate this year, according to Commerce Department data released Monday, another sign that the housing market could be starting to stabilize even as prices continue to stumble.

Sales rose 11 percent over the previous month to an annualized rate of 384,000. That was far better than analysts were expecting and the largest monthly gain in nine years. But sales were still down 21.3 percent compared with the same period last year.

Home sales were up throughout the country, except in the South, which includes the Washington region. Sales were down 5 percent there compared with the previous month.

This follows a National Association of Realtors report last week showing that existing home sales rose 3.6 percent in June, the third straight month of increase. The recent data have sparked hope among economists that the housing sector could stop being a drain on the economy soon, even as analysts predict a slow, bumpy recovery in the sector.

The uptick in new home sales was a pleasant surprise and probably reflects the impact of the $8,000 first-time homebuyer tax credit, which expires in November, said Bernard Markstein, senior economist and director of forecasting of the National Association of Home Builders. Buyers are also responding to lower interest rates and falling prices, he said. "Some of the fear of purchasing a home has subsided," Markstein said.

Builders have slashed production during the past year, helping push the inventory of new homes on the market to 281,000, its lowest level since 1998. It would take 8.8 months to sell all the homes on the market in June at the current sales rate, compared with 10.2 months as of May. That is still above a normal six-month supply, but an improvement, analysts said.

"Overall, the housing sector is showing signs of continued improvement. Though the housing market remains weak compared to the peaks, the improved data will continue to feed into market optimism on green shoots," Win Thin, senior currency strategist for Brown Brothers Harriman, said in a research note Monday.

Despite the smaller inventory, there are still far too many homes on the market, analysts said. And prices took another tumble last month as builders struggled against a glut of foreclosed homes, which has brought down prices across the country. Median new home prices fell about 12 percent to $206,200 compared with June 2008.

Real Estate Round-Up

This week we look at average selling prices for properties closed in the past 7 days. Bethesda/Chevy Chase stands out with a very high average sales price. Alexandria stands out with a very low average "days on market."

District of Columbia

The average sales price of properties closed in the District in the past 7 days was $450,264. The average "days on market (DOM)" for these properties was 75 days.

Arlington

The average sales price of properties closed in Arlington in the last 7 days was $580,357. The average DOM for these properties was 65.

Alexandria

The average sales price of properties closed in Alexandria in the last 7 days was $541,173 with an average DOM of 44.

Bethesda/Chevy Chase

The average sales price of properties closed in BCC in the last 7 days was $1,052,045. The average DOM was 70.