Explaining Southern California's economy

July new home sales in the West: Flat since June, but booming since 2011

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A construction worker in Petaluma, California. New homes sales in the West have surged since July of 2011, according the Commerce Dept.

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. 

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Not enough houses! Lack of supply is driving up prices in the West

New Home Sales Hit A Record High

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The West needs more houses. A lack of supply is driving up prices — and pricing out first-time homebuyers.

The National Association of Realtors (NAR) has released data for existing home sales in July, and overall, the news is pretty good. Median prices in the U.S. extended a five-month streak of year-over-year increases. Home sales also rose across the nation.

However, in the West region, sales were flat from June-July, but up about 6 percent from July of last year. More important, the median price of an existing home in the West made a big jump from 2011: a whopping 25 percent, far more than any other U.S. region.

This is due to good old-fashioned supply-and-demand. There aren't enough existing homes for sale in the West to meet demand. NAR took particular note of this, not just in the West but nationally. The lack of "inventory," as the organization defines it, is affecting lower-priced homes, where first-time borrowers bearing mortgages collide with investors carrying suitcases of cash.

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