Despite the sharp rise of US new home sales in June, up 23.6% - there is nothing to celebrate. June sales of new homes with adjusted annual rate of 330 000 were the second lowest on record.

Sharp rise of the new home sales in June is not so attractive as it seems to be. Or, as the popular slogan of one Washingtonian museum says: "Nothing seems to be as it seems to be."

The rise of new home sales in June by 23.6% seems to be a huge step forward. However, when viewing the data from the broader perspective, new home sales in June with the rate 330 000 remains slow, actually it is the second slowest on record, the US Department of Commerce announced. The slowest pace hit the new home sales previous month, in May with 267 000, the record low since the data was collected in 1963.

It is obvious that the housing market is suffering since the tax credit for buyers ended in April. The figures are the best example and evidence. Also the year over year change shows that the June 2010 estimates were 16.7% below June 2009 level.

Regionally, new home sales increased in three out of four US major regions. The sharpest rise posted the Northeast region, up 46.4%, in South the sales were soaring 33.1% in June and in Midwest the sales were up 20.5%. The month over month drop of sales activity posted only the West region, down 6.6% in June, with the annual rate of 57 000 new homes sold in June hit the new record low.

The slowdown of sales activity reflected also the prices. The median price of new homes sold in June was $213 400, down 1.4% from May and a 0.6% drop from June 2009. The average sales price was $242 900, down 9.8% from May and down 11.6% from June 2009.

US Department of Commerce also announced that there were 210 000 new homes available for sale at the end of June, the lowest inventory level in nearly 42 years. It is estimated that at the current sales pace this represents a supply for 7.6 months. However, 6 months of inventory is considered normal market conditions.

Dagmar Benesova

Photo: ISIFA