Last month resales jumped 3.1% to the highest level in half a year. Additionally, new home sales jumped 2.1% according to the Commerce Department. This came as a mild surprise to Wall Street.
Resales were up all around with the West leading the country with a solid 9.7% increase. Following that was the Northeast with a 6% gain, the Midwest with a 1% gain and the south with a minor drop of 0.5%.
New home sales showed a similar pattern with the Northeast gaining a 39% increase, the West with a 10% increase and the Midwest with an 8.2% jump. The south had a drop in new home sales with a 2.5% drop.
Can this be another sign of a market turnaround? Although this is very good news, we must keep some facts in perspective. A large number of these sales come from first time home buyers and real estate investors sitting on the fence waiting for a clear signal that prices may have bottomed.
These trends are being pushed to a large degree by the large number of short-sales and foreclosures which are cutting prices down to rock bottom. Additionally, many of these sales are occurring in markets that were once booming. For example, Riverside, California and Fort Myers, Florida.
What’s interesting and significant about these trends is that they represent closings as of the end of July which happens to occur before the $7,500 federal tax credit starting in the next few months. Therefore, we can expect to see higher sales numbers and quite possibly a turnaround in house prices around the country soon.