Interesting Times

Sales of new homes in the United States posted their largest monthly gain in nearly eight years in June, the government reported on Monday, a sign that the housing market is bottoming as buyers take advantage of lower prices.

JACK HEALY, NY Times, July 27, 2009

The Commerce Department reported that new single-family home sales rose 11 percent in June, an increase that dwarfed economists’ expectations of a 3 percent increase. The pace of home sales rose to a seasonally adjusted rate of 384,000 a year, the highest level since November.

As sales rose, median prices of new homes continued to fall, slipping to $206,200 from $232,100 in June a year ago.

The figures were the latest evidence that a three-year slump in the country’s housing market was leveling off as prices fell back and some builders and buyers began to step tentatively back into the market. Housing starts rose 3.6 percent in June from a month earlier, and sales of previously owned homes also rose for another month.

“Sales are picking up a little,” a senior economist at 4Cast, David Sloan, said. “Whether it’s going to pick up any momentum is really the key. I think we have to be doubtful about that.”

Although new-home sales have risen for three months, many economists worry that rising unemployment, stagnant wages and continued tightness in lending markets will weigh down the housing market for the rest of the year.

“There’s still worries that the lack of employment growth and lack of wage growth is restraining consumer income, and that’s going to ensure that the recovery is quite modest,” Mr. Sloan said.