Sales of New Homes on the Rise

home under construction

Image courtesy of Fotalia

Sales of New Homes on the Rise
| published Sept. 25, 2014 |

By Thursday Review staff


Though the path out of the Great Recession has been fraught with potholes and unexpected twists, the housing market continues its steady—if sometimes inconsistent—progress forward toward full recovery.

August was not so good for the sale of existing homes, the numbers for which showed that it may still be something of a buyers’ market among some neighborhoods.

But new homes again saw a surge in August, and the U.S. Commerce Department said that the 18% increase was the best in more than six years. The August gains also represent six months of rising sales in new homes. The Commerce Department estimates that the total number of new homes sold in the U.S. in August reached an annually-adjusted rate of 504,000, the best rate since before the mortgage meltdown in 2008.

Coupled with several months of news showing that construction is up as well—based on building permits and a variety of national home construction data—August’s increase is seen by many economists as a sign that the recession, caused mostly by inflated homes values and overpriced mortgages, may finally be a thing of the past.

The spike in sales of new homes helped to ease the pain of last week’s news that existing home sales were slower than expected in August. It is this unevenness in the recovery that worries some economists and business analysts: too many new homes can trigger a surplus, which could then slow additional construction, which would then have the predictable repercussions in other parts of the economy. Economists say that the ideal engine is a more-or-less even rise in the sales of both new homes and existing homes—an indication that many families are upgrading to larger homes, or that new buyers are entering the market.

August sales were the most improved in the West, but mostly flat in the Midwest. The South saw a modest increase of 7.8 percent; the Northeast saw a much bigger increase of 29.2 percent—also its best since the recession.

Related Thursday Review articles:

Home Sales on the Rebound; Thursday Review staff; Thursday Review; August 28, 2014.

The Future's So Bright (I'll Have to Buy Nails!); Thursday Review; August 20, 2014.