New Home Sales Falter After Encouraging Spring

According to the U.S. Census Bureau and the U.S. Department of Housing and Urban Development, sales of new single-family homes fell 9.4 percent over the month of July to a seasonally adjusted annual rate of 571,000. Despite the declines, sales over the first seven months of 2017 are 9.2 percent above their level over the same period in 2016.

The monthly declines took place in the regions of the country that are furthest ahead over the first seven months of 2017 relative to the first seven months of 2016. After reaching their second highest Post Recession level of 630,000 in June, sales of new homes fell to 571,000 in July. Three of the four regions of the country experienced declines: the Northeast (-23.8 percent), the West (-21.3 percent) and the South (-4.1 percent), but the Midwest region recorded a 6.2 percent increase in sales. Over the past 12 months, sales nationwide fell 8.9 percent, reflecting decreases in the Northeast (-13.5 percent), the Midwest (-12.7 percent) and the South (-11.7 percent). Meanwhile, sales in the West are 1.4 percent above their level 12 months ago.

While new home sales fell in July, year-to-date, the number of new home sales is 9.2 percent ahead of its pace over the same period in 2016. In addition, each region recorded sales over the January-to-July 2017 period that exceeds sales over the same period in 2016. In the Northeast, year-to-date sales are 16.1 percent ahead of their pace over the same period last year, followed by the West (14.6 percent), the South (6.8 percent) and the Midwest (5.8 percent).

The months’ supply of homes rose 11.5 percent over the month to 5.8 months. However, this increase largely reflects a decrease in the sales pace, from 630,000 to 571,000. Meanwhile, the number of new homes for sale in July, 276,000, was 1.5 percent above its level in June. Over the past year, inventory has shown signs of improving as the sales pace fell 8.9 percent, but the number of new homes for sale rose by 16.5 percent. Nevertheless, months’ supply remains below the 6.0 month-benchmark for a healthy housing inventory.

By stage of construction, the 4,000 unit increase (SA), reflected a slight increase in the number of homes not started, from 49,000 to 51,000, and in the number of homes completed, from 65,000 to 67,000. Meanwhile, the number of new homes for sale that are under construction remained unchanged at 158,000.

The median sales price rose 0.67 percent over the month to $313,700. Since sales fell, the increase in the median sales price likely reflect changes in the composition of new homes sold. Over the month, the proportion of sales of new homes priced under $300,000 fell 1 percent to 47 percent while sales of new homes priced above $300,000 rose 1 percent to 53 percent.



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