The annual rate of new home sales dropped to 350,000 from an elevated and revised upward May level of 382,000. The larger than expected drop still leaves the quarter-to-quarter change a positive 3.1%. The absolute level of inventories and the month’s supply both remain near historic lows of 4.9 months and 144,000 homes for sale. The number of homes completed and for sale fell to 41,000, the lowest level recorded since inception of the data in 1973.
The extremely low level of inventory is caused by two forces. Builders continue to have difficulty obtaining construction loans to build models and speculative homes and builders hold off finishing homes until buyers sign contracts and make final decisions on finishes. Low inventories leave buyers with fewer choices in the readily-available housing inventory and lessens builders’ competitiveness with the existing market.
Median home prices fell 3.2% from June 2011 (since the figures are not seasonally-adjusted only a year over year comparison is justified). Average home prices were virtually unchanged, which is likely explained by a small gain in the share of homes sold over $400,000 (forcing the average up) and a small increase in the share sold between $150,000 and $199,999 (pushing the median down).
NAHB expects new home sales to continue a modest increase through 2012 as interest rates remain low and house prices begin to tick upward.

Tags: economics, home building, housing, sales