Consumers, discouraged by a climate of economic uncertainty, are reluctant to go forward with a major purchase for fear of what new financial crisis lurks in Washington.
Last week in Atkinson, Illinois, President Barack Obama conceded that it will take at least a year for housing prices and sales to even “start” rising. From the looks of the most recent new-home sales figures, he wasn’t kidding. July marked the third straight monthly new-home decline, and puts 2011 square on pace to become the worst year for new- home housing on record.
Sales of newly built, single-family homes dipped another 0.7 percent in July from the previous month to a seasonally adjusted annual rate of 298,000 units, according to newly released data from the U.S. Commerce Department.
“While new-home inventories are exceptionally thin, home builders are still competing with large numbers of foreclosed and distressed homes on the market and a climate of uncertainty in which consumers are reluctant to go forward with a major purchase for fear of what economic news tomorrow might bring,” said Bob Nielsen, chairman of the National Association of Home Builders (NAHB).
“The sales pace of newly built, single-family homes in July was in line with what it has been over the last year, and this is in keeping with our forecast,” said NAHB Chief Economist David Crowe. “While we expect to see some marginal gains in sales activity through the rest of 2011, we do not foresee any major advances until economic growth helps boost home buyers’ confidence.”
The inventory of new homes for sale in July fell to a 48-year record low of just 165,000 units, which represents a 6.6-month supply at the current sales pace.
“Putting this situation into perspective,” said Crowe, “The current nationwide inventory of completed new homes ready for occupancy – at 61,000 units – is in keeping with what a single major metropolitan area such as Atlanta might sell in a typical year.”