Joe Moshé Says New Home Sales in May Show Signs of Life in Real Estate Market, Despite Negative Economic Indicators

John Mitty Monday, June 25, 2012

FOR IMMEDIATE RELEASE
Contact: John Zaher/Hank Russell, PRMG New York
(631) 207-1057

June 25, 2012

Joe Moshé Says New Home Sales in May Show Signs of Life in Real Estate Market, Despite Negative Economic Indicators

Joe Moshé, Broker/Owner, Charles Rutenberg Realty, says the new home sales report in May shows that the residential Real Estate market may be starting to make a comeback, despite the lack of consumer confidence and other negative economic conditions. He says that, with home prices on the rise, the market may have already hit bottom and could start to rebound.

The Commerce Department announced today that new home sales during the month of May rose 7.6% from the month before to a seasonally adjusted rate of 369,000 units, compared to April’s rate of 343,000 units. Last month’s rate was not only 19.8% higher than it was in May 2011, but it was also the highest rate since April 2010. It also beat economists’ expectations of 346,000 units.

This report comes out following the agency’s announcement last week that permits for new home construction soared to an annual rate of 780,000, up from 723,000 the prior month. It was the highest level since October 2008. The agency also reported that, although there was a drop in new home construction last month — from 744,000 units in April to 708,000 in May — the number of new home being built is up 28.5%, compared to a year ago.

In the past, the Real Estate market’s performance has been dependent on the job market and the unemployment rate, but the May 2012 report has been the exception to the rule. The federal government reported that, during April and May, employers added an average of 73,000 jobs a month, which is lower than the average of 226,000 new jobs a month in the first quarter of 2012. Meanwhile, the Bureau of Labor Statistics reported that the national unemployment rate remained unchanged at 8.2%.

Those statistics affected consumers’ buying power and homebuilders’ outlook on the economy. According to The Conference Board, the Consumer Confidence Index fell from 68.7 in April to 64.9 in May. Meanwhile, the number of housing starts in May fell 4.8% to 708,000 after hitting 744,000 starts the previous month, according to Commerce.

“Those who bought a house believed that, although the economy may be off-track now, it would improve in the coming months and did not let the negative economic indicators influence their decision to make a big-ticket purchase,” Mr. Moshé said. “They may have found a new job that provided them with the disposable income they needed to buy the house they always wanted. Conditions such as mortgage rates and government programs certainly led the way for a healthy environment to purchase a home.”

Commerce also reported that the median price of a new home was $234,500, which is 5.6% higher than May of last year. Although interest rates are up a bit, Mr. Moshe said they are still low enough for someone to afford a new home.

“The increase in home prices is showing that hopefully, the residential Real Estate market is turning a corner,” he said. “Prices have already hit bottom and I do not expect them to go much lower, if at all. With people buying more new homes, the demand will be greater and the residential home construction market will get back on its feet, thanks to more new construction permits being issued last month. However, the market will not recover overnight; it may take months — maybe years — to be fully healthy.”

Charles Rutenberg Realty is one of the nation’s fastest-growing Agencies with more than 1,300 Agents associated in Long Island, Queens, Westchester, the Boroughs and Manhattan. For more information, call (516) 575-7500, or visit www.crrli.com.

jmitty@longislandyellowpages.com

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