New home sales in July increased 4.4% compared with June and were up 31.5% compared with July 2022, according to estimates from the U.S. Census Bureau and U.S. Department of Housing and Urban Development.
Sales of new single‐family homes were at a seasonally adjusted annual rate of 714,000, up from a revised June rate of 684,000 and a July 2022 estimate of 543,000.
The increase more than offsets the 2.5% month-over-month dip that came in June.
The median sales price of a new home sold in July was $436,700. The average sales price was $513,000.
As of the end of the month there were about 437,000 new homes available for sale in the U.S. That’s about a 7.3-month supply at the current sales rate.
“New home sales were solid in July because of an ongoing housing deficit in the U.S. and a lack of resales stemming from many home owners electing to stay put to preserve their low mortgage rates,” says Alicia Huey, chairman of the National Association of Home Builders (NAHB), in a statement. “But builders are still confronting many challenges, including rising mortgage rates, supply chain issues for electrical transformers, a dearth of skilled workers and elevated construction costs.”
“Despite this monthly uptick, new home sales will likely weaken in August as higher interest rates price out prospective buyers,” says Robert Dietz, chief economist for NAHB. “Mortgage rates increased from 6.7 percent at the start of July to above 7 percent in August.”
New home sales now represent a larger share of overall home sales, as existing-home sales have slowed due to homeowners becoming “rate-locked” into their current mortgages.
“Builders are benefitting from the lack of resale inventory,” says Odeta Kushi, deputy chief economist for First American, in a statement. “Existing homeowners don’t have to sell, and by not selling, they continue to gain the utility of shelter. But a builder will do what’s necessary to sell their inventory, including offer incentives.”
“Those incentives can come in the form of mortgage rate buy-downs, paying points for buyers and offering price reductions,” Kushi says. “They can also offer upgrades on appliances and other interior quality features.”
“New home inventory as a share of total home inventory in July reached nearly 31 percent,” Kushi says. “From 2000 until the pandemic, new homes on average made up about 11 percent of total inventory. When existing homes are hard to find, new homes at the right price are a good substitute.”
Photo: Todd Kent