By Shobhana Chandra
Aug. 26 (Bloomberg) — New-home sales in the U.S. improved in July from a 17-year low and construction cutbacks by builders reduced the glut of properties on the market by the most in almost five decades.
Sales increased 2.4 percent to a 515,000 annual pace that was lower than anticipated after a revised 503,000 rate in June, the Commerce Department said today in Washington. The number of unsold homes on the market fell 5.2 percent, the most since November 1963, to a 416,000 pace.
Lower prices have made homes more affordable for Americans still able to obtain a mortgage, stemming the slide in demand and making it more likely the property glut will clear. A more stable housing market would eliminate one of the biggest risks to the economy even as the credit crisis and job losses threaten growth.
“We’re hopefully getting in the vicinity of a bottom,” David Resler, chief U.S. economist at Nomura Securities International Inc. in New York, said before the report. Still, “we’re a long way from a recovery. We’ll see activity at low levels for a while.”