New Home Sales Improve, While House Prices Continue Decline

August 26, 2008 3:48 p.m. EST

Washington, D.C. (AHN) - While new-home sales started to improve across the U.S. in July, house prices for the second quarter dipped by 15.4 percent.

New home sales reached 515,000 units in July, higher than the 503,000 in June, according to the Commerce Department. The July figure is a turnaround from a 17-year low.

The continuous decline in home prices made owning a house within the reach of financially-challenged Americans who could still obtain a mortgage despite the credit crunch. As a result, unsold homes declined 5.2 percent, the largest improvement since November 1963.

The 20-city index of Standard and Poor's/Case-Shiller U.S. National Home Price Index tumbled down 15.4 percent in June, while the 10-city index plummeted 16 percent, its largest decline in 21 years.

By the end of the second quarter, the median price of a new home had gone down 6.3 percent to $230,700 from $246,200 in 2007.

Despite the slow improvement in certain sectors of the housing industry, federal officials are not too optimistic on prospects on the short- and medium-term.

Housing and Urban Development Secretary Steve Preston told Bloomberg, "We have ways to go before we start seeing a turnaround... We'll be well into 2009 before we see some real energy in this market."