Dive Brief:
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Sales of new, single-family houses grew by 5.4% in July to a seasonally adjusted annual rate of 507,000 units, just shy of economists’ predictions, the U.S. Commerce Department said on Tuesday.
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The pace of sales remains approximately two-thirds below their July 2005 peak, when builders sold 1.4 million homes, The Wall Street Journal reported.
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At the same time, the market saw its first drop in the pace of home appreciation since the housing recovery began four years ago, according to a Tuesday report by real estate marketplace Zillow, which said homes lost 0.1% of their value in July. That adds up to an increase of 3% on an annual basis, down from 3.4% in June. The Commerce Department reported the median sales price of a new house in July was $285,900.
Dive Insight:
The combination of growing home sales and slowing home appreciation could be a good economic sign.
"The market is leveling off, and it's good news, particularly for buyers, because it will ease some of the competitive pressure," Zillow Chief Economist Svenja Gudell said in a press release. "This slip in home values is a sign of the times. Many people didn't think it was happening, but it is: We're going negative. We’ve been expecting to see a monthly decline as markets return to normal.”
The improving sales figures follow July and August reports that homebuilder optimism is near a 10-year high. Tom Woods, chairman of the National Association of Home Builders, noted in a Tuesday release that builders are reporting more traffic through model homes from “more serious buyers.”
NAHB Chief Economist David Crowe predicted sales will continue to improve: "As job growth and consumer confidence continue to strengthen," he said, "the housing market should make additional gains this year."
