Sales of newly built, single-family homes in July rose 10.6% to a 739,000 seasonally adjusted annual rate, according to newly released data from the U.S. Department of Housing and Urban Development (HUD) and the U.S. Census Bureau. The pace of new-home sales in July rose 5.6% from a year earlier.
Upward revisions of May and June data by HUD and the Census Bureau are to account for the surprise uptick. Together, the revised and new data indicate new-home sales from January through July rose 2.6% compared to the first seven months of 2023.
Of course, the estimated bump in new-home sales in July could be revised lower next month.
“While mortgage rates moved lower in July, the Census estimated gains for new home sales do not match recent industry survey data including the NAHB/Wells Fargo Housing Market Index which showed weakness in the current sales index,” said National Association of Home Builders (NAHB) Chief Economist Robert Dietz, commenting on July’s sales figures.
A new home sale occurs when a sales contract is signed or a deposit is accepted, and the home can be in any stage of construction: not yet started, under construction, or completed. The vagaries of new-home sales data lead many industry watchers to treat single-family starts and permitting as more accurate gauges of builder activity in the new-construction sector.
“The Census estimate of new home sales is often volatile and subject to revisions and it is possible that the July estimate for sales will be revised lower next month,” Dietz added. “NAHB is forecasting gradual improvements for the home building sector as the Fed eases monetary policy and mortgage interest rates trend lower.”
The 30-year conforming rate closed out July at 6.67%, per Optimal Blue’s Mortgage Market Indices (OBMMI).
Single-family starts fell nearly 15% in July following reports of tightening builder credit in the second quarter when average effective rates on loans for land acquisition and speculative single-family construction were the highest they’ve been since 2018. The year began with single-family permits 23.8% higher in the first quarter than they were in the first quarter of 2023.
“NAHB is forecasting gradual improvements for the home building sector as the Fed eases monetary policy and mortgage interest rates trend lower,” Dietz added.
Meanwhile, new single-family home inventory in July dipped 1.1% from June, representing a 7.5 months’ supply at the current building pace. The July sales reading of 739,000 units is the number of homes that would sell if this pace continued for the next 12 months.
The median new home price in July was $429,800, 3.1% higher monthly but 1.4% lower year over year. On a year-to-date basis, new home sales are up 5.4% in the Northeast, 22.1% in the Midwest, and 6.1% in the West. New home sales are down 2.4% in the South.
“Despite the monthly bump in new home sales data, higher rates continue to sideline buyers as housing affordability challenges remain,” said Carl Harris, chairman of the NAHB and a custom home builder from Wichita, Kan. “The only sustainable way to ease high housing costs is to implement policies that allow builders to construct more attainable, affordable housing.”
