Home sales increase optimism

Though overall consumer spending is still lagging, the recent reports of increased home sales are giving economic analysts reason to breathe a sigh of relief. After months of reporting and forecasting depressing housing news, home sales seem to be taking a turn for the better. According to the Department of Commerce, sales of new single-family homes were up 9.6% in July to 433,000 units from June’s revised rate of 395,000 units.

Existing homes sales are on the rise also. According to the National Association of Realtors, existing homes sales have increased for the last four consecutive months. Preliminary figures show a marked increase of 7.2% to 5.24 million units from a level of 4.89 million units in June. NAR chief economist, Lawrence Yun, noted “A combination of first-time home buyers taking advantage of the housing stimulus tax credit and greatly improved affordability conditions are contributing to higher sales.”

And with this surge of home sales, a reduction in home inventory levels is very noticeable. The current new home inventory level is 7.5 months, the lowest it has been in two years. New home inventory levels earlier this year ranged from 10 to 12 months. A healthy level of inventory would be around 6 months. Existing home inventory levels remained steady at 9.4 months supply over the last two months.

Bottom line, this increase in home sales, both existing and new, is good news for homebuilders, suppliers, furniture retailers and the like. As the pick-up in housing sales continues, it is hopeful that more jobs will become available and people will be able to spend a little more. And, as consumers are able to purchase homes, the furniture industry can be optimistic that consumers will spend on decorating homes with furniture and accessories.