New Home Sales Hit Lowest Level

Sales of newly built homes dropped to their lowest level since the government started tracking the numbers more than four decades ago, with demand for home purchases down in all four regions of the country.

The Commerce Department reported Wednesday that new homes sold in July at an annual rate of 276,000, down 12.4 percent from June and down 32.4 percent compared with the same time last year.

The economy is backsliding a little bit. While it's too soon to tell if that's going to result in another recession, it seems clear that consumers are holding back on committing to major purchases, such as buying a home.

The drop was led by the Northeast, where new home sales fell nearly 35 percent. Sales declined 25.5 percent in the Midwest, 15.1 percent in the South and 9.8 percent in the West.

The underlying demand is extremely weak, despite rock-bottom mortgage interest rates.

The poor new-home sales results follow another damaging report on the existing-home sales. Those sales fell in July to their lowest level in more than a decade to an annual rate of 3.83 million, down 27.2 percent from June's pace.

Housing Market Indicators

Florida existing home sales: 15%  (month-to-previous-year comparison)

Florida existing condo sales: 33%  (month-to-previous-year comparison)

Florida existing home median price: $143,400

Florida existing condo median price: $95,000

Florida consumer confidence: 65

National existing home sales: -5.1% (month-to-previous-month comparison; all housing types)

National existing home median price  $183,700

National (Freddie Mac) mortgage rate 4.42%  (all housing types)

Reasons to Buy Your Dream Home Now

Low mortgage rates serve as an equity shock absorber. When buyers borrow at today's record-low rates, they start building equity as soon as they close. That means they can absorb a few ups and downs as the still-recovering housing market gains traction.

Houses are in move-in condition. Home owners have continued to spend on maintenance and repair, according to the Harvard Joint Center on Housing. As these houses enter the market, they are in marked contrast to tattered foreclosures.

Terrific houses are coming on the market. Foreclosures are finally starting to clear the system, and they are being replaced by some very attractive properties.

Appraisal regulations are finally aligned with market realities. Fannie Mae has adjusted its appraisal guidelines, giving appraisers more flexibility to set values that reflect the current market.

Plenty of programs. Many programs that encourage middle-class families to buy homes continue to exist, despite market downturns. Buyers who qualify can get a big boost by combining one of these programs with today's low mortgage rates.