Drop In New Home Sales May Be Sign Higher Rates Are Biting | WAMU 88.5 - American University Radio

NPR : News

Filed Under:

Drop In New Home Sales May Be Sign Higher Rates Are Biting

Proving once again that when it comes to economic data there's almost always a "but" to watch out for:

The housing sector has been one of the economy's stars in recent months, as we said Thursday when the news broke that sales of existing homes rose an estimated 6.5 percent in July from June.

But ...

Sales of new single-family homes fell 13.4 percent in July from June, the Census Bureau and the Department of Housing and Urban Development reported Friday. What's more, the agencies revised down sharply their estimate of how strong sales of new homes were in June. Instead of running at a 497,000 annual rate, sales are now thought to have been moving along at a 455,000 annual pace as of that month.

The big revision to the June number means sales that month did not hit a 5-year-high, as previously thought. Instead, they came in at the second-highest rate since mid-2008.

MarketWatch writes that "rising mortgage rates may be behind July's drop, though the monthly data are quite volatile and economists had expected some pull back after sales gains in recent months."

The good news is that even with the drop from June to July, sales of new homes were still up an estimated 6.8 percent from their pace a year earlier, in July 2012.

It's also worth noting that the market for new homes is much smaller than the market for existing, or previously owned homes. While new home sales were running at annual rate of nearly 400,000 in July, sales of existing homes were chugging along at a 5.4 million annual rate. So, the positive ripple effects across the economy from rising sales of existing homes should be greater than the negative effects from the drop in new home sales.

But (there's that word again) as NPR's Marilyn Geewax and Chris Arnold reported last week on Morning Edition, economic optimists and pessimists both have things to talk about when it comes to housing these days.

Copyright 2013 NPR. To see more, visit http://www.npr.org/.

NPR

As Summer Winds Down, Wistful Dreams Of A 'Lost Estate'

The scent of fresh pencils is in the air, and homework assignments are around the corner. In honor of back-to-school season, author Alexander Aciman recommends The Lost Estate by Henri Alain-Fournier.
NPR

A Food Crisis Follows Africa's Ebola Crisis

Food shortages are emerging in the wake of West Africa's Ebola epidemic. Market shelves are bare and fields are neglected because traders can't move and social gatherings are discouraged.
WAMU 88.5

McDonnell Corruption Trial: Former Gov Defends Relationship With Jonnie Williams

On the stand today, the former Virginia governor defended his relationship with the businessman at the heart of the trial, saying it was appropriate.
NPR

Coming Soon To A Pole Near You: A Bike That Locks Itself

Cyclists may soon have a convenient way to discourage bike thieves, thanks to new designs that use parts of the bikes themselves as locks.

Leave a Comment

Help keep the conversation civil. Please refer to our Terms of Use and Code of Conduct before posting your comments.