Housing market gains steam as July new-home sales rebound

“New home sales showed a respectable rebound of nearly 26 percent annual growth in July after disappointing with June’s drop and downward revisions for three previous months”, said Selma Hepp, Trulia’s chief economist.

New-home sales rose by 5.4% to a seasonally adjusted annual rate of 507,000, the Commerce Department said Tuesday.

Number of homes sold but not yet started climbed to a 192,000 annualized rate, the most since June 2007.

New-home purchases, tabulated when contracts get signed, are considered a timelier barometer of the residential market than purchases of previously owned dwellings. A strong labor market, lower gasoline prices and an improving housing market also are seen supporting consumer confidence.

“July new home sales data didn’t surprise anyone, but overall we feel great about where the housing market is right now”, said Tom Wind, Executive Vice President of Home Lending for EverBank.

The inventory of new homes for sale was 218,000 units in July. Economists have noted that the inventory of existing homes is tightening, driving up prices.

Much of the additional demand has emerged for a healthier jobs market and low mortgage rates. “Volatility is common for new home sales, but as other housing data released last week have shown, the housing recovery is making steady strides forward”. The Midwest registered a 6.9 percent decline. Toll Brothers, the largest U.S. luxury home builder, said on Tuesday that orders had risen 16 percent so far in the quarter started in August, outpacing the 12 percent rise in the company’s third quarter. Inventory slipped a tenth point to a 5.2-month supply at the current sales pace.