Sales of new homes fell for the third straight month in July, and estimates for April, May, and June were revised down, fueling fears that this year will be the worst on record. Sales declined 0.7% from June, registering an annual rate of 298,000, according to data released today by the U.S. Census and the Department of Housing and Urban Development. While new-home sales improved 6.8% on an annual basis, that number is skewed by the market upheaval caused in July 2010 by the expiration of the home buyer tax credit.
"Last year, our estimation for new-home sales was 321,000," says Patrick Newport, U.S. economist at IHS Global Insight. "This year, we estimate sales will stand at 319,000, but that number will probably be lowered due to downward revisions. It’s shaping up to be the worst year on record for new homes. Data start in 1960, but even if the data went back another 20 years, this year would probably still be the lowest."
As builders continued to pull back on projects, inventory of new homes for sale fell to a record low 165,000 units, a 6.6-month supply at the current pace. Low inventory will be a boon when the market turns, however, recent reports of permits pulled don’t provide much hope of that turnaround coming in the near future.
While the median sales price among new homes fell 6% to $222,000, the average price gained 1% to $272,000. Homes priced between $200,000 and $299,000 fared the best during July, claiming 36% of the market. Numbers dropped off precipitously in higher price ranges, with homes priced between $400,000 and $499,000 claiming to only 4% of total sales.
Claire Easley is a senior editor for Builder.
Learn more about markets featured in this article: Greenville, SC.