New single-family home sales jumped in June, as housing demand was supported by low interest rates, a renewed consumer focus on the importance of housing, and rising demand in lower-density markets like suburbs and exurbs.
Census and HUD estimated new home sales in June at a 776,000 seasonally adjusted annual pace, a 14% gain over May and the strongest seasonally adjusted annual rate since the Great Recession. The April data (571,000 annualized pace) marks the low point of sales for the current recession. The April rate was 26% lower than the prior peak, pre-recession rate set in January.
The gains for new home sales are consistent with the NAHB/Wells Fargo HMI, which returned to pre-recession highs and demonstrates that housing will be a leading sector in an emerging economic recovery. Consider that despite double-digit unemployment, new home sales are estimated to be 3.2% higher through for the first half of 2020, compared to the first half of 2019.
Moreover, pricing firmed in June, with median new home price expanding to $329,200. However, headwinds remain, including elevated unemployment and surging lumber prices, which exceeded their 2018 peak this week.
Sales-adjusted inventory levels declined again, falling to a 4.7 months’ supply in June, the lowest since 2016. This factor points to additional construction gains ahead. The count of completed, ready-to-occupy new homes is just 69,000 homes nationwide. Inventory (including homes available for sale that have not started construction or are under construction) is 7% lower than a year ago.
Thus far in 2020, new home sales are higher in all regions. Sales on a year-to-date basis are 0.2% higher in the South, 3.1% in the West, 12.6% in the Midwest, and 22% higher in the Northeast.