New home sales at best level since late 2007
Sales jump 12.4 percent with boost from low rates, solid job market.
Americans stepped up their purchases of new homes in July to the fastest pace in nearly nine years, the latest sign that low mortgage rates and a solid job market are helping support the residential real estate market.
New-home sales jumped 12.4 percent last month to a seasonally adjusted rate of 654,000 annual units, the strongest level since October 2007, the Commerce Department said Tuesday. The demand has eclipsed the pace of construction. Just 4.3 months’ supply of new homes is available on the market, down from 5.2 months a year ago.
Construction of single-family houses has picked up this year as the market has extended its recovery from the drop-off caused by the housing meltdown that began nearly a decade ago. Sales in July roughly matched the long-standing pace of 650,000 new homes selling each year. As the job market has strengthened and mortgage rates have settled near alltime lows, more buyers have been drawn to new developments and properties.
“We see tremendous growth potential in new-home sales as housing demand continues to grow and the continued supply shortage of newer vintage homes,” said Tian Liu, chief economist at Genworth Mortgage Insurance.
The improved sales of both new and existing homes has supported the broader U.S. economy, which is still hampered by a global slowdown and weak worker productivity. Existing-home sales reached a seasonally adjusted annual rate of 5.57 million in June, the best performance since early 2007.
Construction companies have added 215,000 jobs over the past 12 months. Over the same period, sales have risen 3.5 percent at building materials stores and 4.3 percent at furnishing stores, according to the government.
Purchases shot up 40 percent in the Northeast and 18.1 percent in the South last month. They increased slightly in the Midwest and stayed unchanged in the West.
July’s median sales price dipped 0.5 percent from a year ago to $294,600, a possible reflection of the regional sales mix.
So far this year, new-home sales have climbed 12.4 percent to 352,000.
Builders are increasing construction but are still running behind demand. Ground breakings for houses have climbed 10.6 percent year-to-date, the government reported last week. This marks a sharp reversal from prior years in the recovery from the Great Recession, when a large share of the increase in residential construction came from apartments.
McDonald’s is recalling 29 million fitness wristbands distributed in Happy Meals after dozens of children reportedly developed skin irritations.
The fast-food giant, headquartered in suburban Chicago, stopped including the “Step-iT” activity wristbands in meals last week after receiving “limited reports” of skin irritations associated with the wearable step counters. On Tuesday, McDonald’s stepped up the count and issued the recall after finding more than 70 incidents, including seven reports of blisters from the wristbands, the company said.
“This is a large recall,” said Patty Davis, a spokeswoman with the Consumer Product Safety Commission, which is working with McDonald’s on the recall. “Most recalls that we do don’t have any incidents involved at all.”
The wristbands, which were made in China, came in translucent plastic orange, blue or green, featured a digital screen that tracked a child’s movement and included motion-activated lights.
An effort to promote healthy activity in an unlikely package — Happy Meals — the bands were distributed at McDonald’s restaurants nationwide from Aug. 9 through 17. Another 3.6 million of the recalled bands were distributed in Canada.
Customers who bring back their fitness bands can receive a free replacement toy and either a yogurt tube or a bag of apple slices, the company said.
“McDonald’s is doing the right thing here,” Davis said. “They’re recalling a product that has been shown to cause skin irritation and burns when worn by kids.”
It is not the first major recall for McDonald’s. In 2010, the chain recalled 12 million “Shrek Forever After 3D” collectible drinking glasses after it was found the designs on the glasses contained cadmium, a highly toxic metal and known carcinogen.
In 2002, McDonald’s recalled about 100,000 Chicago Bears bobblehead collectibles sold at 400 Chicago-area restaurants because of excessive levels of lead in the paint.