It was fun to get swept up in the reports that the US housing market had bottomed, and indeed that is what mounting evidence seemed to suggest. However, the latest round of data has really knocked the stuffing out of any hopes that we are in recovery.
The Commerce Department found that new build home sales fell sharply in June. According to the report signed contracts to buy new homes fell 8.4% from the previous month, according to the U.S. Commerce Department, although they are still up 15% from a year ago. Sales levels are now at their lowest since January.
Sales of existing homes slipped 5.4% in June to an annual rate of 4.37 million units and are down 2.6% in the second quarter (4.537 million units). Combined sales of new and existing homes fell 0.4% to an annualized rate of 4.9 million homes, following three consecutive quarterly gains.
Meanwhile the rental market remained positive, with the residential rental vacancy rate falling to 8.6 per cent from 8.8 per cent in the January-March period, the commerce department said on Friday. The second-quarter reading was the lowest since 2002.
It can still be hoped that the strength in the rental market will lead to recovery in the wider market, especially as builders break more ground on multi-family housing projects. On that note, the home ownership rate edged up to 65.5 per cent in the second quarter, from 65.4 per cent in the previous quarter, the commerce department said.
Of course, the strong rental market continues to be good news for foreign investors in the US property market, and foreign investors needn't particularly care about a recovery in the wider market as long as their properties are earning good rents. That said, if the recent run of positivity wasn't the recovery then one wonder when is the US market going to recover. However, June's data could yet come to be seen as a blip on the upward trajectory of recovery – time will tell.
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