New Home Sales Set Record, Keep Housing Market Sizzling

Median Price For New Home Falls

POSTED: 10:29 am CDT July 27, 2005
UPDATED: 10:43 am CDT July 27, 2005

WASHINGTON -- There have been worries of a bubble, but sales of new homes soared to an all-time high in June as the housing market kept on sizzling.

The Commerce Department reported Wednesday that new single-family homes were sold at an annual rate of 1.4 million units last month.

That was a 4 percent rise from the previous record set in May.

The report came just days after sales of existing homes were reported to have set a record in June as the housing industry continues to be powered by low mortgage rates.

As for prices, the median price of a new home fell for a second month, dropping by 5.5 percent in June to $214,800.

Many economists believe we may be seeing the peak for home sales and prices as mortgage rates begin to rise.

They are forecasting that sales gains and prices will level off in the second half of the year.

Meanwhile, there was good news for American manufacturers as orders for big-ticket manufactured products rose at a surprisingly strong clip in June.

The Commerce Department reported Wednesday that demand for durable goods grew by 1.4 percent last month to total more than $215 billion.

This marks the third straight month that manufacturers have seen orders increase following three consecutive declines at the beginning of the year.

The June increase was unexpected. Private economists had been forecasting a decline of around 1 percent.

A drop-off in demand for commercial aircraft was offset by strength in a number of other sectors, from computers to communications equipment.

Excluding transportation, durable goods orders were up a solid 2.6 percent in June.