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New home sales take off

By Judy Martel · Bankrate.com
Thursday, July 25, 2013
Posted: 5 pm ET

What a difference a year makes. Despite a 7 percent increase in the median price of a newly built home this year, sales of new homes gained 8 percent in the past 12 months, the biggest jump since 1992.

The Commerce Department reports that sales of new, single-family homes rose 8.3 percent in June to a seasonally adjusted annual rate of 497,000. The median sales price of new homes was $249,700.

An era of better feeling

The rising prices and sales reflect newfound confidence among builders and buyers. According to the National Association of Home Builders, which this month reported the highest level of builder confidence in seven years, a newly built home creates an average of three new jobs and generates approximately $90,000 in tax revenue. That makes it an important piece of the overall housing recovery.

Because new-home sales represent signed contracts rather than completed purchases, analysts are speculating that buyers are taking action before mortgage rates rise further and while home prices are still affordable. This week, rates on 30-year fixed mortgages fell 2 basis points to 4.54 percent, according to the Bankrate.com national survey of large lenders.

Keep up with your wealth and mortgages, and follow me on Twitter @JudyMartel.

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