American home sales reached a five-year high as developers sold off most of their remaining residential inventory. Sales rose by 8.3 percent across the country as a growing number of Americans invested in residential property – the highest level since the pre-crisis period of May 2008.
The 8.3 percent increase resulted in over 497,000 units being sold above average, with relatively low interest rates encouraging Americans to buy homes. With most existing homes either on the market or already sold, a growing number of people are purchasing new builds, leading to an increase in residential construction.
The increase in home sales has been viewed as a major driver of economic growth in the United States, with economists claiming that the increase in new builds will lead to expansion in the construction industry. Construction was one of several American industries hit hard by the financial crisis and the downturn in property sales.
Despite the possibility of growth, many economists are fearful that an increase in the average mortgage interest rate could cause homebuyers to back away from an investment in property. The Federal Reserve’s quantitative easing program, which has kept interest rates low, is likely to end towards the end of the year.
The slowdown in QE programs has resulted in a slightly downward trend emerging in residential mortgage applications. Despite the fears, the average new home price has increased over the past twelve months. The median home price was $232,600 in June of 2012, and was recorded at $249,700 this year.
New homes made up about seven percent of total home sales over the last year, with construction firms seeing the growing amount of new properties as a positive sign for the industry as a whole. The amount of new homes being sold has increased by 38 percent in the past twelve months – the biggest annual increase since 1992.