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New home sales up 10 percent in lift to construction industry

Thursday, August 27, 2009

New home sales are up in a good sign for homebuilders.
New home sales are up in a good sign for homebuilders.

Sales of newly-constructed homes rose at a better-than-expected pace of 10 percent in July, the fourth-straight month of increases, reaching the highest rate since last September. For homebuilders and construction equipment industries, it's the best sign yet that housing is on a path to recovery.

Other indicators in the housing sector could mean that housing is back to growth, rather than merely slowing its decline. For the first time in five years, existing-home sales have increased for four months in a row, according to the National Association of Realtors (NAR).

Existing-home sales - including single-family, townhomes, condominiums and co-ops - rose 7.2 percent to a seasonally adjusted annual rate of 5.24 million units in July from a level of 4.89 million in June. That is better than the pace in July 2008.

Lawrence Yun, NAR chief economist, said the housing market has decisively turned for the better.

However, commercial real estate continues to struggle and new construction in the commercial segment could be off for a long time to come.

Construction equipment dealers and building contractors may have to hope that government stimulus spending can make up for lost revenues due to the commercial real estate slump.

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