New home sales in the US are skyrocketing

A house under construction in Pacific, Washington (credit: Wikipedia Commons)
A house under construction in Pacific, Washington (credit: Wikipedia Commons)

The housing market is in rebound mode. In April, sales of new, single-family homes jumped nearly 17 percent since the previous month — the fastest increase since January 2008.

At a median price of $321,100, according to the Commerce Department, new home purchases totaled more than 600,000. This figure accounts for roughly a 10th of all home purchases.

“The fundamentals for new home sales are good, and getting better: more jobs, rising wages, more household formations, and very low mortgage rates,” Gus Faucher, deputy chief economist at PNC Financial Services, told the Wall Street Journal.

Existing home sales and construction numbers have also been strong, the former posting two straight months of gains, National Association of Realtors found last week. Meanwhile, about 780,000 single-family homes are projected to break ground this year.

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But housing construction rate and sales have yet to catch up to pre-recession levels. Between 1990 and 2000, on average 716,000 new homes were sold every year. Buyers closed on 501,000 homes in the U.S. in 2015.

Home prices, in particular, have been on the incline because of low inventories.

“The drop in supply means sales prices for new homes may rise quickly throughout the remainder of the home buying season,” Trulia’s chief economist Ralph McLaughlin told the Journal. [WSJ]Cathaleen Chen