New Home Sales Fall, But All Not Bad

HUD and the Census Bureau on Friday reported July new home sales fell by nearly 13 percent from June but improved from a year ago.

The report said sales of new single-family houses in July came in at a seasonally adjusted annual rate of 635,000, 12.8 percent lower than the revised June rate of 728,000, but 4.3 percent higher than a year ago (609,000).

Regionally, sales fell sharply in the South, West and Midwest but jumped in the Northeast. In the South, sales fell by 16.1 percent to 359,000 units, seasonally annually adjusted, in July from 428,000 units in June but improved by 3.2 percent from a year ago. In the West, sales dropped by 14.2 percent to 181,000 units in July from 211,000 units in June but improved by 8.4 percent from a year ago.

In the Midwest, sales dropped by 11.1 percent to 56,000 units in July, seasonally annually adjusted, from 63,000 units in June and fell by 18.8 percent from a year ago. In the Northeast, sales jumped by 50 percent in July to 39,000 units from 26,000 units in June and improved by 56 percent from a year ago.

HUD/Census said the median sales price of new houses sold in July rose to $312,800; the average sales price rose to $388,000. Both prices rose by 5 percent from a year ago. The seasonally adjusted estimate of new houses for sale at the end of July rose slightly to 337,000, representing a supply of 6.4 months at the current sales rate, up from 5.5 months in June.

Mark Vitner, senior economist with Wells Fargo Securities, Charlotte, N.C., noted the sharp July dip was partly because June’s sales were revised substantially higher to a 728,000-unit pace, the strongest since 2007.

“Sliding mortgage rates and builder discounts have led to an overall improving sales trend compared to last year’s sluggish pace,” Vitner said. “Amid strengthening demand for more affordable homes, builders have discounted prices and shifted focus towards more entry-level construction.”