New home sales surge in June while prices continue to fall

07.28.09
By James Conroy

The lagging home market is getting some good news as it appears more Americans are getting a mortgage loan and making a home purchase with the sale of single-family homes rising 11 percent in June, according to the Commerce Department.

While the figures show the third month in a row that the sale of new single-family homes increased, last month's numbers were still 21.3 percent lower than the same time last year.

Although home sales have been on the rise, the price of new homes continues to fall with the median existing home price slipping to $206,200 in June - down from $219,000 in May and a 12 percent drop from June of last year.

But Pat Newport, an analyst for IHS Global Insight says the increased home sales may not be related to an increased economy and instead be related to the $8,000 tax credit for first-time homebuyers.

"I only wonder how much of the increase is coming from rising demand from new homebuyers," he told CNNMoney.com. "The tax credit is boosting demand, but what will happen when it goes away in December?"

The numbers from the Commerce Department come just days after figures from the National Association of Realtors showed that existing home sales increased 3.6 percent in June with a median sale price of $181,800.

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Home sales are on the rise, but prices continue to drop