The Commerce Department reported Monday that new home sales dropped 2.4 percent from June to a seasonally adjusted annual rate of 412,000. Normal would be closer to 800,000, industry figures show, which means sales are only about half way back to where they should be.
Only a few days earlier, the National Association of Realtors reported that sales of previously-built (or existing) homes jumped 2.4 percent in July to their highest level since September, reaching a seasonally adjusted annual rate of 5.15 million. That’s closer to where it should be but not quite there. Based on the size of the population and recent job gains, a normal sales rate would be 5.5 million or more. This helps explain why the mix of homes available to potential buyers is totally out of whack.
In more normal times, six existing homes are sold for every new home, said Jed Kolko, chief economist at Trulia. During the depths of the housing bust, the ratio reached 14 to 1. Now the ratio is closer to 12.5 to 1 — even though 41% of Americans surveyed by Trulia say they would prefer to buy a newly-built home over one with previous owners. (A sizeable chunk of them, however, are not willing to pay the 20 percent premium that’s typically attached.)
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