U.S. home sales jumped in June

BY ALAN ZIBEL
Associated Press

New U.S. home sales jumped in June by the largest amount in more than eight years as buyers took advantage of bargain prices, low interest rates and a federal tax credit for first-time homeowners.

While home prices are still falling, the figures released Monday were another sign the housing market is finally bouncing back. Data out last week showed home resales rose 3.6 percent in June, the third straight monthly increase.

Shares of big home builders soared on the news, with Beazer Homes USA up by more than 13 percent and Hovnanian Enterprises rising 8 percent. But with home prices still falling, these companies won't be making much money anytime soon.

The Commerce Department said new home sales rose 11 percent in June to a seasonally adjusted annual rate of 384,000, from an upwardly revised May rate of 346,000.

However, new home sales for the southern region of the country, which includes Florida, fell 5.3 percent.

Brad Hunter, West Palm Beach-based chief economist and national director of consulting for Metrostudy, a housing research firm, said the government's estimate should be taken with a grain of salt since the margin of error is 13.2 percent.

``The trend we are seeing is that the absorption of new home sales or move-ins is basically still falling,'' Hunter said. ``They are not moving at as fast a rate as they were even a few months ago, which is disturbing.''

Metrostudy's most recent analysis of South Florida showed new home sales fell from 1,204 to 668 between the first and second quarter in a six-county region extending from Miami-Dade to Indian River.

Nonetheless, economists said buyers were rushing to take advantage of a federal tax credit that covers 10 percent of the home price or up to $8,000 for first-time buyers. Home sales need to be completed by the end of November for buyers to take advantage.

``The window of opportunity is closing,'' said Bernard Markstein, senior economist for the National Association of Home Builders.

June's results were the strongest sales pace since November 2008 and exceeded the forecasts of economists surveyed by Thomson Reuters, who expected a pace of 360,000 units. The last time sales rose so dramatically was in December 2000.

Sales have risen for three straight months. The median sales price of $206,200, however, was down 12 percent from $234,300 a year earlier and down nearly 6 percent from $219,000 in May.

``Over the last three or four months there has been a large increase in traffic and you have a larger increase in inquiries as to homes,'' said Fernando Martinez, vice president of sales and marketing with Homestead-based Caribe Homes and president-elect of the Builder Association of South Florida. ``The traffic is ready to buy. They've been looking for a while. They are part of the pent-up demand, Martinez said.

Fallout from the housing crisis has played a central role in the U.S. recession, now the longest since World War II. Foreclosures have spiked, home builders have slashed construction, and financial companies have lost billions.

But it will still be a while before home builders turn into an engine for the economic recovery. Construction levels are still weak because builders still have too many unsold homes sitting vacant.

Miami Herald Business Writer Monica Hatcher contributed to this report.

Source: http://www.miamiherald.com/2009/07/28/1160396/us-new-home-sales-register-a-sharp.html