Home sales surge in July

ABQ metro area joins national increases in prices, purchases

Purchases of new U.S. homes unexpectedly jumped in July to the highest level in almost nine years, led by soaring demand in the South and adding to signs of persistent housing-market strength.

Sales increased 12.4 percent from the previous month to a 654,000 annualized pace, the fastest since October 2007, Commerce Department data showed Tuesday in Washington. That exceeded the most optimistic forecast in a Bloomberg survey. Purchases in the South were the strongest since before the start of the last recession.

Employment gains and historically low borrowing costs are providing firm support for housing demand, helping reduce inventory, which will probably keep new construction elevated. The report showed an increase in the share of homes sold for less than $300,000, indicating builders are turning their sights to entry-level buyers.

The increase “makes perfect sense when interest rates are low, credit continues to ease, and the consumer is in decent shape given the jobs market,” said Brett Ryan, U.S. economist at Deutsche Bank Securities Inc. in New York. “You’re seeing finally that builders are responding with more supply, and that’s been one of the big problems in the current cycle.”

Even as prices rose through July, existing single-family detached homes in the Albuquerque market also sold faster than in the past several years.

This has created a situation where buyers need to move fast in order to secure homes, and they may have to pay more for them. The median detached home price year over year rose 3.2 percent to $189,900 in July, and the average price rose 6.8 percent to $226,192, according

to the Greater Albuquerque Association of Realtors.

As the inventory of detached homes for sale dropped 16.1 percent in July, detached homes sold in an average of 48 days, which is 20 percent faster than in July 2015.

The association does not compile new-home sales because most of those homes are sold directly to buyers by builders and aren’t listed in the multiple listing service, said Jon Schnoor, association president.

The Home Builders Association of Central New Mexico says that midway through 2016, new residential construction rose by 3.6 percent.