National new home construction sales falls for the third straight month, signaling that our economy is still in the gutter. If this continues, the year 2011 will be the worst in history for new home builder since the 60's. The percentage of the fall was around one percent in July, yielding adjusted annual rate of 298,000, the Commerce Department said Tuesday. That is half of what a "healthy" market usually represents, which is around 700,000.
New construction makes up less than one-fifth of the housing market, it has an overall impact on the economy. For every new home that is built, it creates an average of 3 new jobs and $90,000 in taxes, this is according to the National Association of Home Builders.
A high unemployment rate, tougher lending requirements and larger down payments are not helping the situation. Plus, with the stock market plunging and growing fear that the United States could tip back into another recession are also keeping buyers from entering into a troubled market.
Paul Dales, a senior U.S. economist at Wells Fargo
said, "A slowdown in the U.S. economy has more than offset any boost from super-low mortgage rates. A new home is a luxury that many Americn can no longer afford."
Over all home sales are weak. When we are in a good economy, people normally buy 6 million existing homes a year. This years sales pace is for previously occupied homes is 4.91 million sales. Also, a report just last week showed that more homes fell apart at the last minute than usual another sign that buyers are concerned about the economy. At least 16 percent of homes sales canceled at head of closing in July, that is four times more than May.
There is a silver lining in this very dark cloud, sales rose in July for new homes valued at less than $150,000. A loan amount that shows most people are comfortable with paying but most of the homes go quick. If they are in decent shape or in a great neighborhood these homes move quick. It usually takes a day or two to be on the market until they have an offer on the property.
A median price for new homes also fell more than 6 percent to $222,000 nationally. Overall it is still 27.5 percent higher the median price of a owner occupied home which is $174,000 in July.
Not to really put you in a more depressed mood but prices have dropped nationally more since the recession started on a percentage basis, than during the Great Depression of the 1930's. And it took 19 years to fully recover. Yikes!
But I will end this on a positive note for us living in the frozen tundra we call home, the Midwest region of the country sales rose 2.4 in July so pick you heads up and try to stay positive!