Sales of new homes rose unexpectedly in July, following significant revisions in the previous months’ data.
Sales of newly built, single-family homes in July increased by 10.6% to a seasonally adjusted annual rate of 739,000 from substantial upward revisions in June, according to newly released data from the U.S. Department of Housing and Urban Development and the U.S. Census Bureau. The pace of new home sales in July is up 5.6% from a year earlier. After notably higher revisions for May and June data, new home sales from January through July 2024 are up 2.6% compared to the same period in 2023.
“Despite the monthly bump in new home sales data, higher rates continue to sideline buyers as housing affordability challenges remain,” said Carl Harris, chairman of the National Association of Home Builders (NAHB) and a custom home builder from Wichita, Kan. “The only sustainable way to ease high housing costs is to implement policies that allow builders to construct more attainable, affordable housing.”
“While mortgage rates moved lower in July, the Census estimated gains for new home sales do not match recent industry survey data including the NAHB/Wells Fargo Housing Market Index which showed weakness in the current sales index,” said NAHB Chief Economist Robert Dietz. “The Census estimate of new home sales is often volatile and subject to revisions and it is possible that the July estimate for sales will be revised lower next month. NAHB is forecasting gradual improvements for the home building sector as the Fed eases monetary policy and mortgage interest rates trend lower.”
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 July reading of 739,000 units represents the number of homes that would sell if this pace continued for the next 12 months.
New single-family home inventory in July ticked lower to a level of 462,000, down 1.1% from the previous month. This represents a 7.5 months’ supply at the current building pace. While this reduced level of months’ supply is above the commonly used balance measure of six months, total home inventory remains low at near 4.5 months when considering both new and existing homes.
The median new home price was $429,800, up 3.1% compared to last month but down by 1.4% from this time last year.
Regionally, on a year-to-date basis, new home sales are up by 5.4% in the Northeast, 22.1% in the Midwest and 6.1% in the West while declining by 2.4% in the South.
