Sales rose 12.4% to an annual rate of 654,000 – the fastest since October of 2007, Bloomberg reported. The spike exceeded the most optimistic projections in Bloomberg’s most recent survey, with purchases in the South stronger than they’ve been since before the start of the last recession. The Bloomberg survey’s median forecast had called for sales to slow to an annual pace of 580,000, with surveyed economists’ projections ranging between 540,000 and 610,000.
Housing demand is being boosted by job gains and low borrowing costs. There’s also been an increase in the share of homes sold for less than $300,000, indicating builders are starting to cater more to entry-level buyers, Bloomberg reported.
Deutsche Bank economist Brett Ryan told Bloomberg that the increase “makes perfect sense when interest rates are low, credit continues to ease, and the consumer is in decent shape given the jobs market. You’re seeing that builders are finally responding with more supply, and that’s been one of the big problems in the current cycle.”
The number of homes sold but not yet built also hit a nine-year high, signaling that construction will contribute to economic growth in the coming months, Bloomberg reported. But inventory is still tight, with the supply of homes falling from June’s 4.9 months to 4.3 months in July.
New home purchases took an unexpected upswing in July, hitting their highest level in nearly nine years, according to a Bloomberg report. The spike was led by rising demand in the South.