June New Home Sales Falter

June new home sales suffered a setback in June, unable to meet May’s promising momentum, HUD and the Census Bureau reported yesterday.

The report said sales of new single-family houses in June fell to a seasonally adjusted annual rate of 631,000, 5.3 percent lower than the revised May rate of 666,000, but 2.4 percent higher than a year ago (616,000). Sales have fallen two of the past three months.

Regionally, only the Northeast saw an increase, by 36.8 percent, seasonally annually adjusted, to 52,000 units in June from 38,000 in May; sales improved by 20.9 percent from a year ago.

In the South, sales fell by 7.7 percent to 361,000 units in June from 391,000 in May but improved by 8.1 percent from a year ago. In the West, sales fell by 5.2 percent to 147,000 units in June from 155,000 in May and fell by 15 percent from a year ago. In the Midwest, sales fell by 13.4 percent to 71,000 units in June from 82,000 units in May but improved by 7.6 percent from a year ago.

The median sales price of new houses sold in June 2018 fell to $302,100; the average sales price rose slightly to $363,300. One bright side to the report was new home inventories, which rose to 301,000 in June, representing a 5.7-month supply.

Mark Vitner, Senior Economist with Wells Fargo Securities, Charlotte, N.C., said the June stumble in new homes sales is “getting harder to explain away.”

“New home inventory has been rising and June’s 5.7-month supply is well within historical norms,” Vitner said. “Affordability is likely holding back home sales.” He added rising interest rates “appear to be causing buyers to shift to less expensive homes or put off buying altogether.”

Vitner added June’s softer new home sales “should serve as a bit of a wakeup call. Housing simply is not going to strengthen as much as had been hoped. Higher mortgage rates and rising home prices are apparently a bigger hurdle than policymakers expected.”