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July New Home Sales Rise as Real Estate Market Continues to be a Mixed Bag

August 24, 2007 on 9:53 pm | In Real Estate, Real Estate News |

The media would often have us believe that the current mortgage crisis has us on the verge of some massive economic collapse, yet we continue to see strength in the economy and surprising numbers in certain sectors of the real estate market.

The mortgage situation isn’t something to ignore, but we heard the cries of “real estate bubble about to burst!” while in reality it put up record numbers. We still hear those cries today, but it’s tough to take the alarmism seriously given the history. All we’ve seen thus far is a relatively moderate slowdown - a deflation rather than a pop - and it shouldn’t come as a surprise. Shouldn’t anything putting up record numbers year after year eventually slow down?

Most of the problems we’re experiencing are related to mortgage loans taken by people who couldn’t afford to pay them. This isn’t to say they can’t impact us, but it’s important to put the current problem in context.

All that said, the real estate picture continues to be a mixed bag. Every month or so the analysts are “shocked” by positive numbers put up in the housing sector. They certainly don’t put the legitimate concerns to bed, but they do deal a blow to the chicken littles out there.

Today we learn that “new-home sales” rose a significant amount in July. Again, it’s not the rosiest all around picture, but it certainly should calm the nerves of folks who continue to brace for the worst… as they’ve been told to do for years:

Sales of new homes perked up, while factory orders took off in July, raising hopes that the economy can safely weather financial turmoil that has shaken Wall Street.

The Commerce Department reported Friday that new-home sales rose 2.8 percent in July, after falling 4 percent in June. The increase in July lifted sales to a seasonally adjusted annual rate of 870,000 units. A second report showed that orders to factories for big-ticket goods jumped 5.9 percent in July, the most in 10 months.

Of course, the surge was localized:

By region of the country, the improvement in sales in July reflected gains in the West and the South, where sales went up by 22.4 percent and 0.6 percent respectively. Sales, however, tumbled 24.3 percent in the Northeast and were down 0.9 percent in the Midwest.

And again, it’s not all good news:

Even with the overall increase in home sales for July, sales are down a deep 10.2 percent from a year ago, underscoring the toll of the housing slump.

But it’s important to keep in mind that no bubble has been “popped”, and we continue a slowdown that has (so far) been pretty manageable. Before the chicken littles get you too spooked over the mortgage crisis’ implications, consider this: Who would have thought we’d not survive steady $3 per gallon gas prices, but have a booming economy in the face of it?

Tags: home buyers, new home sales, real estate slowdown, home buying, real estate market, housing, house sale, new real estate, real estate sale, home sales, new real estate sales