Foreclosures, Distressed Sales Still Negatively Affecting New Home Sales in July

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Based on newly released data from the U.S. Commerce Department, sales of newly built, single-family homes held virtually unchanged in July with a 0.7 percent dip from the previous month to a seasonally adjusted annual rate of 298,000 units.

"The fact that new-home sales fell by less than one percent in July is an indication of how little conditions have changed in the housing market," said Bob Nielsen, chairman of the National Association of Home Builders (NAHB) and a home builder from Reno, Nev. "While new-home inventories are exceptionally thin, home builders are still competing with large numbers of foreclosed and distressed homes on the market and a climate of uncertainty in which consumers are reluctant to go forward with a major purchase for fear of what economic news tomorrow might bring."

"The sales pace of newly built, single-family homes in July was in line with what it has been over the last year, and this is in keeping with our forecast," said NAHB Chief Economist David Crowe. "While we expect to see some marginal gains in sales activity through the rest of 2011, we do not foresee any major advances until economic growth helps boost home buyers' confidence."

Regionally, new-home sales recorded declines of 7.4 percent in the South and 5.9 percent in the West, but rose 2.4 percent in the Midwest and actually doubled (100 percent increase) in the Northeast from a record low number in the previous month.

The inventory of new homes for sale in July fell to a 48-year record low of just 165,000 units, which represents a 6.6-month supply at the current sales pace. Putting this situation into perspective, said Crowe, "The current nationwide inventory of completed new homes ready for occupancy - at 61,000 units - is in keeping with what a single major metropolitan area such as Atlanta might sell in a typical year."

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