WASHINGTON (Reuters) – Sales of new US single-family homes reached near 13-year highs in June due to better interest in the housing market due to broader interest rates and COVIDs in low-density areas from urban centers Migration was reduced. -19 epidemic.
FILE PHOTO: A new house under construction was seen on 30 July 2018 in Los Angeles, California, US. REUTERS / Lucy Nicholson
The Commerce Department’s Upbeat report on Friday followed on the heels of the figures this month, with homebuilder confidence rising in July and June seeing a boom in construction and sales of previously owned homes.
The coronavirus crisis has allowed companies to employ employees from home. The emergence of home offices and schooling has increased the demand for spacious homes in small metro areas, rural markets and large metro suburbs. The strength of the housing market can help shore up the retail sector as homeowners buy furniture, garden equipment and other supplies
“Housing has a strong immune system,” said Michelle Meyer, chief US economist at Bank of America Securities in New York. “The shock affected the low-income population, who are less likely to own a home.”
New home sales rose 13.8% at a seasonally adjusted annual rate of 776,000 units in July last month, the highest level since July 2007. The May sales momentum increased to 682,000 units from the previously reported 676,000 units.
New home sales have now made up for the loss, when non-essential businesses were closed in mid-March to slow the spread of respiratory disease. New home sales are counted on to sign a contract, making them a leading housing market indicator.
Economists polled by Reuters had estimated new home sales, which accounted for about 14% of the housing market sales, rose 4% to reach 700,000-unit speeds in June. New home sales rose 6.9% in June from a year earlier.
But a resurgence in new COVID-19 transitions, which has forced some authorities in the South and West regions to either close businesses or resume operations, could slow the housing market pace is.
In addition, labor market recovery appears to have stalled for the first time in nearly four months, with the number of Americans claiming unemployment benefits increasing last week. At the start of July, a staggering 31.8 million people were checking for unemployment.
Job losses have disproportionately affected low-paid workers, which may explain why the housing market is better off than other sectors of the economy, which slipped into recession in February.
Sky-rocketing coronavirus cases are overshadowing commercial activity, although production is stable. A separate report from data firm IHS Market on Friday showed its Flash US Composite PMI Output Index, which tracks manufacturing and service sectors, which rose to 50.0 from 47.9 in June this month. The increase declined five straight monthly.
Reading above 50 indicates an increase in private sector production. IHS Markit said that some service providers were struggling with the re-production of lockdown measures. The flash composite new order index of the survey rose to 49.5 this month from 49.9 in June.
Stocks on Wall Street were trading as low as US-China tensions and so far this week, anticipating cases of rising COVID-19 on investor sentiment, erasing all gains for the benchmark S&P 500 index. The dollar slipped against a basket of currencies. US Treasury prices fell.
Nevertheless, housing fundamentals, which account for just over 3% of the economy, remain favorable. According to data from mortgage finance agency Freddie Mac, the 30-year fixed mortgage rate is, on average, 3.01%, which is close to a 49-year low. The market has more buyers with age 47 for the first time.
“This demographic is less likely to be affected by unemployment, will be more financially secure and has a better credit history vs. younger members of the population who are more likely to work in retail and hospitality at lower salaries,” James Knightley, The chief said the International Economist at the ING in New York.
“Older home buyers are also likely to be looking for an investment property or vacation home.”
In June, new home sales rose 89.7% in the Northeast and jumped 18% in the West. They increased 7.2% in the South, accounting for the bulk of transactions, and advanced 10.5% in the Midwest. The median new home price rose 5.6% to $ 329,2000 in June from a year earlier. Last month new home sales were concentrated in the $ 200,000 to $ 400,000 price range.
There were 307,000 new homes on the market in June, down from 311,000 in May. At the June sales pace, it will take 4.7 months, down from 5.5 months in May to clear the supply of homes on the market. More than 60% of homes sold last month were either under construction or have not yet been built.
Reporting by Lucia Mutikani; Edited by Jonathan Otis and Andrea Ricci