Commerce Department Numbers Show Brisk Pace of Sales
This article is from the archive of The New York Sun before the launch of its new website in 2022. The Sun has neither altered nor updated such articles but will seek to correct any errors, mis-categorizations or other problems introduced during transfer.
Americans bought new homes at a record pace last month as prices fell.
The 4% increase in sales of new single-family houses brought the annual pace to 1.374 million from May’s 1.321 million, faster than originally reported, the Commerce Department said yesterday. Sales exceeded the highest forecast. The median price fell 5.5% to $214,800.
Low mortgage rates, employment gains, and income growth made houses more affordable. The biggest increase was for houses priced between $150,000 and $199,999. Home purchases, likely to set records for all of 2005, will continue to support consumer spending and employment, economists said.
“It looks like housing is just roaring along,” the chief economist at the forecasting firm Global Insight Incorporated, Nariman Behravesh, said. “At this rate, it will boost economic growth along with a lot of other things that we’re seeing, including manufacturing of household durable goods and building materials.”
A separate report showed unexpected strength in manufacturing. Orders at American factories for durable goods rose 1.4% in June after a 6.4% increase in May that was larger than previously reported. Excluding transportation equipment, orders rose 2.6%, the biggest increase this year.
The rise in home sales may also show that buyers are trying to beat increases in mortgage rates and nail down an investment.
“A lot of people are thinking, ‘I have to buy a house if I want to make some money with my investment dollars, especially with the stock market not being so attractive,'” the president of Americana Mortgage Group, Bob Moulton, said.
The median forecast in a Bloomberg News survey of 55 economists called for sales to rise to 1.3 million from a previously reported 1.298 million. Estimates ranged from 1.25 million to 1.35 million.
Sales rose in all regions, increasing 5.1% in the South to 640,000; 2.8% in the West to 399,000; 2.1% in the Midwest to 246,000, and 7.2% in the Northeast to 89,000. Gains in the South, where prices tend to be lower, helped push down the median price, the chief U.S. economist at MFR Incorporated, Joshua Shapiro, said.
The number of new homes for sale at the end of the month rose to a record 454,000 from 443,000 in May, yesterday’s report showed.
