New-home sales rise 11% nationally in June

Sales of newly built homes rose 11 percent in June over May's levels, but they were 21.3 percent below June 2008's number, the Commerce Department reported yesterday.

Competition from foreclosures and short sales, in which a lender agrees to accept less than what is owed on the mortgage, continued to take a huge bite out of median prices, however - especially in the distressed markets of California, the Southwest, and Florida, where new construction comprises the lion's share of home sales.

June's median price was $206,000 (half the homes sold for more, half for less), down 6 percent from May's $219,000 and down 12 percent from the $234,300 of June 2008, the department reported.

Although annualized sales for June - 384,000 new homes - were better than experts forecast, they represented only about one-third of the 900,000 units sold in a normal (not boom) year.

Still, TD Bank chief economist Joel Naroff was enthusiastic.

"People are back out there actually signing on the dotted line, partly because prices are down," Naroff said. "But a sale is a sale, and if it takes lower prices or, in many cases, smaller and less well-equipped product, so be it."

Other observers, such as IHS Global Insight economist Patrick Newport, saw less to crow about.

"Though the market for new homes is improving, selling [one] has never been harder: The median time that a new home sits on the market before selling rose to an all-time high of 11.8 months," Newport said. "The number is rising because builders must cover their costs and do not have the option of selling homes at 'fire sale' prices."

Sales in the northeastern United States were up 29 percent in June over May's levels, the Commerce Department reported.

Data for the eight-county Philadelphia region, collected by Hanley Wood Market Intelligence, are available only through May. But those numbers show higher sales activity in South Jersey, especially in the first-time market, as an increased number of buyers move to take advantage of lower asking prices and the $8,000 federal tax credit that ends Dec. 1.

"You have to look no further than prices to see why South Jersey is leading the way," said Wayne Norris, regional sales manager for Hanley Wood.

The average home price on the Pennsylvania side of the river was $50,000 higher than in South Jersey, Norris said. The difference was wider, $150,000 less in New Jersey, in the single-home category.

Sales in Burlington, Camden, and Gloucester Counties were 14.8 percent higher in May than in the previous year, while the five Pennsylvania counties, including Philadelphia, were down 33.2 percent from 2008.

Yet in South Jersey, the increase, in whole numbers, represents just 25 houses. In Pennsylvania, the decrease translates into 100 fewer houses.