New single-family home sales for July were at a seasonally adjusted annual rate of 739,000, according to estimates released jointly by the U.S. Census Bureau and the Department of Housing and Urban Development (HUD).
The rate is 10.6% above the revised June rate of 668,000 and is 5.6% above the July 2023 estimate of 700,000.
“July's surge in new-home sales was the result of a construction boom in which some builders emphasized affordability. In July, 18% of new-home sales were for houses that cost less than $300,000. A year before, that price range accounted for only 13% of new-home sales,” says Holden Lewis, home and mortgage expert at NerdWallet.
In July, the median sales price of new houses sold was $429,800 and the average sales price was $514,800.
“Builders are finishing work on a lot of houses, so the inventory of new, unsold homes is growing. Some 102,000 ready-to-move-in homes were for sale in July, the highest inventory of completed and unsold homes since 2009. The rising inventory of completed homes will give builders an incentive to bargain with buyers,” Lewis adds.
The seasonally adjusted estimate of new houses for sale at the end of July was 462,000, which represents a supply of 7.5 months at the current sales rate.
In correlation with the increase in new-home sales, the Mortgage Bankers Association (MBA) Builder Application Survey data for July revealed that mortgage applications for new-home purchases increased 9.4% compared to a year ago. Compared to the month prior, applications increased by 9%. This change does not include any adjustment for typical seasonal patterns.
"Purchase applications for newly built homes increased 9% in July helped by sustained demand for new homes and declining mortgage rates,” says Joel Kan, MBA’s vice president and deputy chief economist.
“The FHA share of applications was at 29%, the highest share in MBA’s survey dating back to 2013, as first-time buyers continue to account for a significant share of purchase activity, given the limited availability of starter homes around the country. Our estimate of new-home sales also showed an 8% increase over the month, which is a result of buyers having additional buying options in the housing market."
By product type, conventional loans comprised 60.1% of loan applications; FHA loans, 29.1%; RHS/USDA loans, 0.4%; and VA loans, 10.4%. The average loan size for new homes decreased from $399,879 in June to $393,344 in July.
