The Commerce Department has released data on new home sales for July. For the West region, sales were flat from June, declining a blippy 0.9 percent. But compared with July 2011, sales have boomed, surging 69 percent. That's by far the best of any U.S. region and well above the July 2011-July 2012 increase for the nation as a whole.
In July, the West and South accounted for a majority new houses sold and for sale — 286,000, our of a U.S. total of 372,000. For those keeping track, the South is in the lead and has been for a while.
The data indicates that the U.S. housing market is moving in the right direction. As we learned yesterday when the National Association of Realtors released July existing home sales data, we have a supply-and-demand problem with housing in the U.S and in the West in particular. Prices are being pushed up because there isn't enough housing inventory to meet demand.
That means new homes will have to be constructed. And the July Commerce Dept. data shows that's just what's starting to happen. The important question now is: If the hangover of the housing crisis is beginning to fade, how long will it take the market to normalize, with first-time homebuyers able to participate — and take advantage of low interest rates — just as easily as investors doing all-cash deals?
That's a tough question to answer, but for the past few months, all the data has pointed toward a housing market that's recovering, setting the stage for prices to start a long crawl out of a deep, deep hole. Foreclosures and other distressed sales could continue to drag prices down, but eventually, those properties will work their way through the system. That could take a year or more. But at least the end is in sight.