A decline in new home sales in July was announced with dread on Tuesday by a panel of analysts, who expect that the housing market may have years of stalled recovery ahead.
This isn’t good news for sellers or the overall health of the market, but is great news for buyers who are still shopping for their dream home, or even still saving up for their down payment. Rates are still staying low as well, another bright spot for aspiring homeowners.
According to the Commerce Department, the seasonally adjusted rate of new home sales in July decreased 6.8% from a year ago, which was a significant amount below analyst expectations. Sales for this year dropped under the 300,000 market, near the low of 278,000 units in August 2010.
This could be due to the fact that new home sales have a lot to compete with considering the glut of distressed and previously foreclosed properties. The Commerce Department estimates that roughly 165,000 new homes are for sale on the market, roughly equal to a 6.6-month supply. However, according to the Mortgage Banker the shadow inventory of distressed property hovering in the wings ranges as high as 4.5 million properties, according to the Mortgage Bankers Association.
Recent reports hint that it could take as long as 44 months to work through the shadow inventory, likely a large factor in the pessimism of the analysts’ new home sale forecasts.
Overall, despite spelling trouble for investors in the general housing market and private sellers, it’s a great time to hop in the game not just for hopeful homeowners, but also for property investors looking for an avenue for rental income. With the increasing demand and according rise in rental prices, now is a great time to look at both single family and multi unit dwellings.
We want to hear your thoughts–is this new report a blessing in the form of a curse?
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