New home sales increased to 372,000 per year on a seasonally-adjusted annual basis in July, which ties the revised May 2012 rate for the highest level since the end of the home buyer tax credit in early 2010. Monthly data does have more statistical variations so looking at a quarterly moving average shows sales have been increasing since September 2011.

 
New home sales have improved markedly better than existing home sales since early fall 2011. New home sales have increased 22% since then while existing home sales have progressed less than 5% in the same period. This most recent period is a significant change in performance between the two sectors within the weak recovery. From peak to trough, new home sales fell 80% between July 2005 and February 2011 while existing home sales dropped at maximum of 54% between September 2005 and July 2010.

 
Some of the better improvement in new home sales is due to the low availability of existing homes especially at the lower end of the price spectrums. New homes also offer the latest in technology, energy savings and minimum maintenance offsetting any bargain pricing because of distress. Up to this point, new home prices have had a bottom dictated by the cost of land and building, but as home prices begin to recover, the bottoms rise and building new homes becomes possible again.

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