The news in today’s newly-built home sales report was found in the estimates for June, rather than July.
Contracts for new, single-family home sales decreased in July by 12.8% to a 635,000 seasonally adjusted annual rate according to estimates from the joint release of HUD and the Census Bureau.
However, that decline came off an significantly upwardly revised June estimate, which was increased from an initial reading of 646,000 to a new estimate of 728,000. Industry surveys of builders suggested that June sales were stronger than initially estimated, and July sales improved off that base. As a result, we expect a revision to the July Census estimate as well.
Year-over-year, the July estimate of 635,000 is 4.3% higher compared to July 2018. On a more stable, year-to-date basis, new home sales are running 4.1% higher thus far in 2019, compared to the comparable 2018 data. New home sales are performing better than single-family permits (-4.7% year-to-date change), as lower rates and price incentives boosted demand in recent months. The general rising trend for new home sales, after the housing affordability crunch of 2018, suggests additional permit growth in the second half of 2019.
We expect the volume of new home sales to continue to expand along the current modest pace, subject to monthly volatility and supply-side cost concerns.
Inventory increased 7.3% from a year ago to a level of 337,000 single-family homes for sale in July. The current months’ supply stands at a near normal level of 6.4. This marks a somewhat elevated level of inventory. However, the months’ supply measure for June was revised down 5.5.
Median new home sales price (price of a home in the middle of the distribution) increased in July to $312,800 compared to $327,500 a year ago.
For the first seven months of 2019 (and relative to the first seven months of 2018), new home sales were up 7.2% in the South, 9.5% in the West, and down 12.4% in the Midwest and 15.4% in the Northeast.