New Home Sales Rise, But Remain Sluggish

Sales of new single‐family houses rose by 7 percent in June, HUD and the Census Bureau reported yesterday.

The report said June sales came in at 646,000, a 7 percent increase from May’s revised 604,000 and 4.5 percent higher than a year ago. The median sales price of new houses sold in June rose to $310,400. The average sales price rose to $368,600. The seasonally adjusted estimate of new houses for sale at the end of June fell to 338,000, representing a supply of 6.3 months at the current sales rate.

Regionally, gains in the South and West offset declines in the Northeast and Midwest. In the South, sales rose by 0.3 percent in June to 382,000 units, seasonally annually adjusted, from 381,000 units in May and improved by 9.5 percent from a year ago. In the West, sales jumped by 50.4 percent in June to 185,000 units from 123,000 units in May and improved by 19.4 percent from a year ago.

In the Midwest, sales fell by 26.3 percent in June to 56,000 units, seasonally annually adjusted, from 76,000 units in May and fell by 17.6 percent from a year ago. In the Northeast, sales fell by 4.2 percent in June to 23,000 units from 24,000 units in May and fell by 50 percent from a year ago.

Mark Vitner, Senior Economist with Wells Fargo Securities, Charlotte, N.C., said despite rebounding from May’s totals, new home sales remain “disappointing.” He noted despite the June increase, sales for the prior three months were revised lower, by 55,000 units total, leaving the level of sales well below consensus expectations. Virtually all of the increase came from the West.

“The smaller than expected June rebound and downward revision to the prior data raises a number of questions about just how much of a lift lower mortgage rates will provide the housing sector,” Vitner said. “The devastating floods that inundated parts of the Midwest this spring likely contributed to the sharp 26.3% drop reported for new home sales in that region during June.”