Housing: Have we hit bottom?

An unexpected jump in new-home sales has the markets optimistic. Is the hope warranted?

“Great news for the economy,” said Stephanie Armour in USA Today. New-home sales “surged” 9.6 percent in July compared with a month earlier, to a seasonally adjusted annual rate of 433,000—the highest pace since last September. Taken together with the reduction of new houses on the market and rising home prices in 18 of 20 markets, as noted in this week’s S&P/Case-Shiller Index, the jump in sales “bolstered signs of an improving housing market.”

Let’s look at those numbers a different way, said Bernard Condon in Forbes: “New-home sales for July clocked in at their lowest level for that month since 1982.” Also, sales are 9 percent lower than last July, and down “a frightening 32 percent” since January, compared with the same period last year. Yes, July marked the fourth straight monthly increase, and “housing may indeed have bottomed. But let’s not get carried away.”

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