New home sales increased 4.4% month-over-month in July to a seasonally adjusted annual rate of 714,000 in July (consensus 701,000) following the prior revised count of 684,000 (from 697,000) in June. Sales are the highest level since February 2022. On a year-over-year basis, new home sales were up 31.5%. 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 July 2023
- New home sales increased 4.4% month-over-month in July to a seasonally adjusted annual rate of 714,000 in July (consensus 701,000) following the prior revised count of 684,000 (from 697,000) in June.
- On a year-over-year basis, new home sales were up 31.5 percent (±16.3 percent) above the July 2022 estimate of 543,000.
- Single family sales +4.4% vs -2.8% prior
- Median sale price $436.7K vs $478.2K a year ago (-8.7%)
- The average sales price was $513,000, as opposed to $564,900 a year ago.
- Supply months 7.3 vs 7.4 months prior
New home sales month-over-month by region:
- West up 21.5 percent to a rate of 181k
- Midwest surged 47.4 percent to 84k
- South declined by 6.3 percent to 416k
- Northeast dropped 2.9 percent to 33k
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 18 August 2023 was released:
The weekly mortgage applications index declined 4.2% with purchase applications down 5.0%, hitting their lowest level since 1995, and refinancing applications down 3.0%.
- US MBA mortgage applications w.e. 18 August -4.2% vs -0.8% prior
- Market index 184.8 vs 193.0 prior
- Purchase index 142.0 vs 149.5 prior
- Refinance index 397.1 vs 408.4 prior
- 30-year mortgage rate 7.31% vs 7.16% 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.
From The TradersCommunity News Desk