Builders say it’s the lowest level since the start of the pandemic (April 2020), with buyers priced out due to high interest rates and ongoing building and development costs.
WASHINGTON, July 26 – New home sales in June fell to the lowest level since April 2020, the first full month of pandemic lockdowns.
Sales of newly built, single-family homes fell 8.1% last month to a 590,000 seasonally adjusted annual rate from a downwardly revised reading in May, according to the U.S. Department of Housing and Urban Development and the U.S. Census Bureau. Year-to-year, new home sales dropped 13.4%.
“Builders saw sales decline significantly as buyers were priced out of the market on higher interest rates and ongoing home building and development costs, including building materials,” says Jerry Konter, chairman of the National Association of Home Builders (NAHB). “This is just the second time that new home sales have fallen below a 600,000 annual pace since Oct. 2018 – and this latest report also mirrors a sharp decline in builder confidence as noted in our latest survey.”
Danushka Nanayakkara-Skillington, NAHB’s assistant vice president for forecasting and analysis, says buyers face sticker shock. “Only 14% of new home sales in June were priced below $300,000. A year ago, it was 27%. Meanwhile, inventory levels are elevated and will contribute to near-term production declines as the market finds a new balance.”
New single-family home inventory remained elevated at a 9.3 months’ supply, up 60.3% over last year, with 457,000 available for sale. However, only 39,000 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 dipped to $402,400 in June, down 9.5% compared to May but up 7.4% year-to-year.
Regionally, new home sales fell in all four regions, down 12.1% in the Northeast, 24.8% in the Midwest, 12.6% in the South and 9.6% in the West.
A new home sale occurs when a sales contract is signed or a deposit is accepted. The home can be in any stage of construction: not yet started, under construction or completed. In addition to adjusting for seasonal effects, the June reading of 590,000 units is the number of homes that would sell if this pace continued for the next 12 months.
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