Purchases of new homes in July increased to the highest level in nearly nine years, the latest sign that low mortgage rates and a growing job market are helping to boost the residential real estate market.
New-home sales jumped 12.4 percent last month to a seasonally adjusted rate of 654,000 annual units. This is the strongest level since October 2007, according to estimates by the U.S. Census Bureau and the Department of Housing and Urban Development.
Demand has been so strong it has eclipsed the pace of construction. There is only a 4.3-month supply of new homes currently available on the market, down from 5.2 months a year ago.
Construction of single-family houses has picked up this year as the residential housing market continues to recover. Sales in July roughly matched the long-standing pace of 650,000 new homes selling each year. As the job market strengthens and mortgage rates are near all-time lows, more buyers have been drawn to new developments and properties.
"Low mortgage rates are feeding much of this confidence," JMAC Lending’s Founder and President Christina Pham said. “To meet the increase in demand, JMAC has expanded with more products and increased staff to keep pace.”
Existing-home sales are also robust, reaching a seasonally adjusted annual rate of 5.57 million in June, the best performance since early 2007.
Purchases shot up 40 percent in the Northeast and 18.1 percent in the South last month. They increased slightly in the Midwest and stayed unchanged in the West.
July's median sales price dipped 0.5 percent from a year ago to $294,600, a possible reflection of the regional sales mix.