New Home Sales Continue Downhill Slide

Although it was not the dramatic, 8.1% month-over-month decrease seen in June, sales of new single-family homes in July fell to a seasonally adjusted annual rate of about 412,000 – about 2.4% below the revised June rate of 422,000 – according to the U.S. Census Bureau and the Department of Housing and Urban Development.

The median sales price of a new home sold in July was $269,800. The average sales price was $339,100.

The news comes just as home builders are increasing their efforts to bring more inventory onto the market: Earlier this month the Census Bureau reported that housing starts jumped in July to reach the highest level in eight months. The seasonally adjusted annual rate of about 1.1 million new units is 15.7% above the revised June estimate of 945,000 units and 21.7% above the July 2013 rate of 898,000 units.

Despite the drop in new home sales for July, they were nevertheless 12.3% above the July 2013 estimate of 367,000.

About 205,000 new homes were for sale at the end of July, about a six-month supply at the current sales pace.

‘We are somewhat surprised by this dip, considering builder confidence and new home starts are on the rise,’ says Kevin Kelly, chairman of the National Association of Home Builders (NAHB), in a statement. ‘However, builders are increasing their level of inventory in anticipation that sales will gradually improve during the rest of the year.’

‘Though new home sales is a volatile metric that can fluctuate significantly from month to month, the economic fundamentals are in place for an ongoing housing recovery,’ adds David Crowe, chief economist for the NAHB. ‘Consumer confidence continues to improve, mortgage rates are at yearly lows, and the labor market is healing. These factors should help spur pent-up demand.’

Regionally, new home sales fell 30.8% in the Northeast, 15.2% in the West and 8.8% in the Midwest. Meanwhile, July sales were up 8.1% in the South.

Despite the drop in new home sales, the National Association of Realtors reported earlier this month that existing-home sales increased to a seasonally adjusted annual rate of 5.15 million in July, an increase of 2.4% from the 5.03 million in June and the highest annual pace so far this year.

The NAHB reported last week that builder confidence in the market for newly built, single-family homes rose two points to 55 on its Housing Market Index for August, bringing the index to its highest level since January.


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