Decline in June Sales of Newly Constructed Homes
In June, sales of newly built homes in the United States experienced a decline, cooling down after a significant surge in the previous month. According to the Commerce Department’s report on Wednesday, U.S. new-home sales fell 2.5% to an annual rate of 697,000 in June, as compared to a revised figure of 715,000 in the prior month. This seasonally adjusted figure reflects the number of homes that would be constructed over a year if builders maintained the same pace each month.
The sales figures were lower than anticipated by Wall Street, with economists expecting new-home sales to reach 725,000 in June. The decline in home sales was primarily driven by a sharp drop in the Midwest region. However, overall new-home sales have remained high because home builders are one of the few in the market offering inventory for potential home buyers.
It is important to note that the data for May has been revised significantly, with new-home sales being revised to 715,000 from the initial estimate of a 12.2% increase to 763,000. It is worth mentioning that new-home sales data can be volatile on a month-to-month basis and are often subject to revisions.
The median sales price of a new home sold in June experienced a slight decline to $415,400 compared to $416,300 the previous month. Over the past few months, new homes have become more affordable, approaching the median price of existing homes, which was $410,200 in June, according to the National Association of Realtors.
The supply of new homes for sale dropped by 2.8% between May and June, resulting in a 7.4-month supply. Regionally, the Northeast led the nation in new-home sales, posting a significant increase of 21%, although the overall figure was impacted by considerable drops in the Midwest and West regions.
Compared to the previous year, sales of new homes have seen a considerable increase of 24%. However, after a remarkable surge in the previous month, new-home sales have experienced a slight softening. While the limited availability of previously owned homes for sale has driven many buyers to the new-home market, high mortgage rates may potentially dampen demand. As of Wednesday morning, the 30-year rate was averaging 7%, with expectations of another increase in the central bank’s benchmark interest rate.
To maintain buyer interest despite higher rates and worsening affordability, home builders are continuing to offer incentives.