New homes sold at a slower pace in July, according to the John Burns Real Estate Consulting monthly survey released Thursday, with an average of 1.6 net sales per community, compared to historical norms of four net sales monthly per community.
Difficulties with appraisals were recognized as one of the major setbacks, with many proving to be lower than a new home’s sales price. But appraisals represent just one aspect of July sales challenge: John Burns Real Estate Consulting survey also concluded that the prices of homes are continuing to decline due to pressure from foreclosures and resales.
The firm said the pricing exceptions seemed to be well-located projects in Washington, D.C., which have seen their prices stabilize in the last month, and California, where reports of price stability are emerging.
Overall, “the Texas region is faring the best, while the Southeast is faring the worst. California had the highest sales rates this month, driven by the expiring state tax credit and recent press regarding rising median home prices,” said Jody Kahn, vice president of Irvine, Calif.-based John Burns Real Estate Consulting.
The news isn’t all bad. While builders do report that sales are lower than they were two months ago, in May, sales still remain higher than they were last year. More respondents said they are building more; 71% of participants started from one to four homes this month. Finally, inventory has declined as well, with an average of 3.5 completed unsold units per community in July, compared to 4.0 in June.
The survey included 304 home building executives managing 2,089 home communities in 93 metro areas.
Monica Stern-Morales is an editorial intern at BUILDER magazine.
Learn more about markets featured in this article: Washington, DC.