The 29.6% year-to-year decline is slowest pace since 2016. NAHB says “higher prices and increased interest rates are generating a notable slowing” in the market.
WASHINGTON – Sales of newly built, single-family homes in July fell 12.6% to a 511,000 seasonally adjusted annual rate from a downwardly revised reading in June, according to newly released data by the U.S. Department of Housing and Urban Development and the U.S. Census Bureau.
New home sales are down 29.6% from a year ago. It’s the lowest pace of new-home sales since January 2016.
“The disappointing sales pace mirrors an ongoing decline in builder sentiment as elevated mortgage rates and higher construction costs are pushing more consumers out of the market, particularly entry-level buyers,” says Jerry Konter, chairman of the National Association of Home Builders (NAHB).
“The sharp drop in new home sales is another clear indicator that housing is in a recession,” adds Danushka Nanayakkara-Skillington, NAHB’s assistant vice president for forecasting and analysis. “The combination of higher prices and increased interest rates are generating a notable slowing of the housing market.”
A new home sale occurs when a sales contract is signed or a deposit accepted. The home can be in any stage of construction – not yet started, under construction or completed. After adjusting for seasonal effects, the July reading of 511,000 units is the number of homes that would sell if this pace continued for the next 12 months.
New single-family home inventory remained elevated at a 10.9 months’ supply, up 81.7% over last year, with 464,000 available for sale.
However, only 45,000 of the new home inventory is completed and ready to occupy. The remaining have not started construction or are currently under construction.
The median sales price rose to $439,400 in July, up 5.9% compared to June, and up 8.2% year-to-year.
Regionally, on a year-to-date basis, new home sales fell in all four regions, down 14.9% in the Northeast, 26.5% in the Midwest, 13.4% in the South and 15.7% in the West.
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