Sales of new single-family houses improved on both a monthly and yearly basis in July, according to estimates released by the U.S. Census Bureau and the Department of Housing and Urban Development (HUD).
“There are two housing markets today. Sales in the existing-home market are slow because of a lack of supply and high prices,” says Zonda chief economist Ali Wolf. “In the new-home market, homes are unused, which helps justify the price, and builders are offering incentives to help with today’s housing affordability challenges. As such, sales are down in the existing-home side and up in the new [home side].”
Sales were at a seasonally adjusted annual rate of 714,000 in July, 4.4% above the revised June rate of 684,000 and 31.5% higher than the July 2022 estimate of 543,000.
“The number of homes for sale that have not yet been started rose 11.3% to 108,000, the highest level in survey history, suggesting housing starts could remain robust over the coming months if demand remains sufficient,” says Fannie Mae chief economist Doug Duncan. “The number of completed homes for sale also increased, rising 8.7% to 75,000, the highest level since April 2020.”
According to the Census Bureau estimates, the median sales price of new houses sold in July was $436,700. The average sales price was $513,000.
“For 17 months in a row, buyers have been able to select from an inventory of more than 400,000 new homes for sale nationwide, which is a high number historically,” says Holden Lewis, home and mortgage expert at NerdWallet. “And builders are responding to the home affordability crisis: In July, 40% of new houses were sold for less than $400,000. A year earlier, 33% cost less than $400,000.”
The seasonally adjusted estimate of new houses for sale at the end of July was 437,000, according to the Census Bureau and HUD. This represents a supply of 7.3 months at the current sales rate, down 0.2 months from June.
“The July report was in line with our expectation for new-home sales; however, given that mortgage rates have again risen above 7%, we believe the risk to new-home sales is to the downside,” Duncan says. “Of course, this may be partially offset as a rise in completed inventories may lead builders to offer more generous concessions to bolster demand.”