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Falling new home sales figures send mixed economic message

Real estate developers and investors in Florida and around the country may be surprised to learn that the number of new homes sold in June 2015 was down by 6.8 percent. The adjusted annual rate of new home sales was 482,000 in June compared to 517,000 in May. The May total was also adjusted down from an original estimate of 546,000. While some say the June figures indicate that the real estate market is cooling down, others point out that new home sales are traditionally volatile and account for only a fraction of the residential real estate market.

New home sales account for about 10 percent of the residential housing market, and the number of new houses sold in the first six months of 2015 are over 20 percent higher than they were in 2014. The drop in June was caused by falling sales in the West, Midwest and South. Sales of new homes in the Northeast were up 28 percent in June.

Data from the National Association of Realtors reveals that previously owned homes are selling at a pace not seen since early 2007, and sales in June were up by over 3 percent. The fall in new home sales is also not reflective of the construction industry as a whole. According to the Commerce Department, residential property construction is soaring due to high demand for apartments. Another sign of health in the property market is the confidence of home builders. The National Association of Home Builders says that its members are more bullish than they have been since late 2005.

Buying a new home is a major step, and it can also be a shrewd investment. However, the journey from initial offer to closing can be confusing, and mistakes can be costly. An experienced real estate attorney could help home buyers to avoid many of the common pitfalls.

Source: The Wall Street Journal, "New-Home Sales Fall 6.8% in June", Kate Davidson and Kris Hudson, July 24, 2015

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