New home sales decreased 2.5% month-over-month in June to a seasonally adjusted annual rate of 697,000 units (consensus 722,000) from a downwardly revised 715,000 (from 763,000) in May. On a year-over-year basis, new home sales were up 23.8%. New home sales activity is being helped by the tight supply of existing homes for sale. However rising mortgage rates that created added affordability pressures. Reality is though with rates over 6.5%, and inflation high- and real-income hurt lower affordability and supply pressures remain for many prospective buyers.
US new home sales for June 2023
- New home sales decreased 2.5% month-over-month in June to a seasonally adjusted annual rate of 697,000 units (consensus 722,000) from a downwardly revised 715,000 (from 763,000) in May.
- On a year-over-year basis, new home sales were up 23.8%
- Single family sales -2.5% vs +12.2% prior
- Median sale price $415.4K vs $416.3K a year ago
- The average sales price was $494,700.
- Supply months 7.4 vs 6.7 months prior
New home sales month-over-month by region:
- West down 13.9% to a rate of 143k
- Midwest tumbled 28.4% to 53k
- South rose by 4.3% to 460k
- Northeast surged 20.6% to 41k
Note new home sales in the West has the highest concentration of higher-priced homes. The report reflects how rising mortgage rates are impeding sales of higher-priced homes, evidenced by the year-over-year declines in both median and average selling prices.
The report confirms the effect of rates and new home sales remain concentrated in higher-priced homes, as inflation pressures, pushed by supply constraints and labor shortages, are curtailing the building of lower-priced homes and pinching affordability for lower-income buyers.
Earlier today the latest data from the Mortgage Bankers Association for the week ending 21 July 2023 was released:
The weekly MBA Mortgage Applications Index fell 1.8% with purchase applications dropping 3.0% and refinance applications remaining flat from last week.
- US MBA mortgage applications w.e. 21 July -1.8% vs +1.1% prior
- Market index 206.9 vs 210.7 prior
- Purchase index 159.2 vs 163.2 prior
- Refinance index 444.5 vs 446.4 prior
- 30-year mortgage rate 6.87% vs 6.87% prior
Existing home sales account for 90% of US transactions and are calculated on a contract close basis. New home sales account for the remaining 10% and are based on contract signings.
The big question is after the surge in rates and slash in rates how much damage has been done with the massive wealth erosion.
Source: Census.gov
From The TradersCommunity News Desk