New Home Sales Skyrocket
New homes are selling at a record pace as the housing market
jumps to the tune of a boom economy. Sales of new homes edged
up again in May, reported the Commerce Department last week,
reaching a seasonally adjusted rate of 890,000, the highest total since the
government began tracking these figures 35 years ago. May, 1998 was
the ninth consecutive month above 800,000, the longest such streak
in 21 years.
Demand for new housing has been strong over the past 12 months.
Some real estate experts are calling this the strongest new home
market since the 1970s.
What's driving the demand? Low interest rates hovering around 7
percent for a 30-year fixed mortgage are certainly helping to
make homes affordable to more buyers, plus enabling buyers to
step up to larger homes with more features. High levels of
employment, rising incomes, and pent-up buyer demand also
contribute to higher sales--all good news for the housing
industry and mortgage finance sectors of the economy.
Fortunately for consumers, prices of new homes are rising
but not astronomically. House prices rose 5.8 percent nationally in
the past year, according to housing industry reports.