New Home Sales Down From May, but Up From Last Year

(Image courtesy Census Bureau)

Sales of new single-family homes in June hit a seasonally adjusted annual rate of 697,000, according to estimates jointly released by the U.S. Census Bureau and HUD.

The June numbers were down 2.5% from May’s revised rate, but up 23.8% from the June 2022 estimate.

“Given the decline in June and the downward revision in May, second quarter actuals came in below our second quarter expectation, which will likely lead us to tamp down our third quarter outlook for new home sales,” said Hamilton Fout, Vice President of Economics at Fannie Mae. However, “new homes represented roughly 30% of homes on the market in June 2023, well above the average of nearly 16% in 2019.”

“The ‘lock-in effect,’ in which existing homeowners are disincentivized to list their homes due to not wanting to give up a mortgage rate much lower than current market rates, continues to suppress the number of existing home listings,” Fout continued. “We believe this lack of existing homes on the market is pushing prospective buyers toward new homes, bolstering sales and construction.”

The median sales price was $415,400, and the average sales price was $494,700.

The seasonally adjusted estimate of new homes for sale at the end of the month was 432,000, or a supply of 7.4 months at the current rate.

“Aside from a dearth of existing inventory, builders have also benefited from the large cohort of millennials reaching the age of first-time homeownership,” Jackie Benson and Patrick Barley of Wells Fargo said. “This group seems to be more willing than current homeowners to take on today’s elevated mortgage rates.”