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Reality Behind the 11% rise in home sales

While an 11% rise in new home sales certainly makes for good reading, it doesn’t mean much when it’s not put into perspective.

And the reality is that for a start, year-over-year sales are still down 21%. In addition, while it may well be a good time to grab a bargain, the government wants to hammer the point home by offering puffy buying incentives and tax credits.

But perhaps the most notable reason for the sales rises is the home foreclosure situation. Foreclosures hit a record over the first half of 2009, swamping the market with homes and pushing down prices.

And as the National Association of Realtors notes, the percentage of homes sold as foreclosures totaled 31% in June. Although the rate is declining (down from 50% earlier this year), it’s still a hefty amount.

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