Recent data from the US government has shed light on a surprising decrease in new home sales, juxtaposed with an increase in median prices. During June, sales of single-family homes saw a 0.6% decline on a seasonally adjusted basis, settling at an annualized rate of 617,000. This figure comes from a revision of May’s sales, which stood at 621,000, as reported by the Census Bureau and the Department of Housing and Urban Development (HUD).
Analysts had projected sales to rise to approximately 640,000, which would have represented a 3.4% increase from the initial figures, according to a Bloomberg survey. Year-over-year, new home sales have dropped 7.4%. Further dissecting the statistics, the Northeast reported a 7.7% month-to-month decline in sales, with the Midwest not far behind at 6.9%.
Conversely, the South and West experienced slight increases in their sales figures. A closer look at annual performance reveals a stark contrast, with the Midwest showing a remarkable 33% increase while the Northeast and South suffered double-digit declines. The median sale price for new houses has surged to $417,300, a rebound from May’s figure of $407,100, signaling a return to price growth after a two-month period of stagnation.
This price escalation occurs within a context of changing supply dynamics: new home inventory reached a supply level equivalent to 9.3 months, reflecting a 2.2% increase from May's 9.1-month supply—an almost 21% increase compared to the same timeframe in 2023. The total seasonally adjusted estimate of homes available for sale at the end of June stood at 476,000, showing an increase of 0.8% from the previous month and approximately an 11% rise year-over-year. Derek Holt, Head of Capital Markets Economics at Scotiabank, highlighted that the new-home market is facing an emerging inventory issue.
According to his note released on the same day as the sales data, there is a notable rise in unsold inventory when assessed against the current selling rates. Furthermore, the National Association of Realtors reported an unsettling 5.4% decline in existing home sales for last month, coinciding with record-high prices.
This uptick in prices, alongside an increased inventory level—the highest in over four years—presents a complex picture of the housing market and its dynamics in the coming months..