New Home Sales Weaken in June

A federal report Monday showed new single-family houses were sold at a seasonally adjusted annual rate of 676,000 homes in June, down 6.6% from May and down 19.4% from June 2020.

Curt Long, NAFCU’s chief economist and vice president of research, said he expects new home sales to remain constrained by supply and pricing, even though the economic outlook is “generally good.”

“New home sales fell for the third month in a row as construction struggles contend with demand and high construction costs,” Long said. “Construction is pushed to its limits with increased costs, supply challenges and an inability to keep up with the current number of projects, resulting in homebuilders putting projects on hold.”

The number of new homes listed for sale reached a post-recession high of 353,000 annualized units, but the share of new home inventory that has been completed fell to an all-time low of 9%, compared with 25% before the onset of the pandemic.

“The long-term outlook is good as millennials reach their prime home buying years,” Long said.

The report from the Census Bureau and the Department of Housing and Urban Development found the median sales price in June was $361,800, down 5% from May and up 6.1% from June 2020.

Only 17% of new homes sold in June were in the $150,000-to-$299,999 price range in June, compared with 30% a year earlier. And 17% of June sales were for $500,000 or more, compared with 12% a year earlier.

The report showed new home sales for the quarter fell 19% from the first quarter.

The Mortgage Bankers Association’s July 21 forecast revised its expectations for new home sales downward from the previous month’s forecast. Its July 21 forecast showed new home sales for the second quarter would be 17% lower than the first quarter, and would rise 9% in the third quarter and 5% in the fourth quarter.

The MBA said it expects sales to rise 14% in 2022.