The Commerce Department said on Wednesday that new home sales fell 12.4 percent in July, the slowest pace on record since 1963. As a matter of fact, the past three months have been the worst on record for new home sales.
Translated in layman’s terms, weak home sales mean fewer jobs in the construction industry, which in turn powers economic recoveries.
According to the National Association of Home Builders, each new home built creates an average equivalent of three jobs for a year and generates about $90,000 in taxes. So, if new homes aren’t selling, there’s no incentive to build more which is why home builders have been forced to compete with foreclosed properties that are offered at significantly lower prices.
High unemployment, slow job growth, and tight credit are the main reasons that are keeping people from buying homes, and although the industry received a boost this spring when the government offered tax credits to homebuyers, that offer has expired last April.