Several reports released this week show a continued slowdown in new single-family home sales and prices over the past year, along with an increase in inventory.
A joint report by the U.S. Census Bureau and Department of Housing and Urban Development (HUD) showed new single-family home sales in June at a seasonally adjusted annual rate of 627,000 units, which is 0.6% above May’s rate of 623,000. But it is a 6.6% dip from the June 2024 rate of 671,000.
A new home sale occurs when a sales contract is signed or a deposit is accepted. The home can be in any stage of construction: not yet started, under construction or completed. In addition to adjusting for seasonal effects, the June reading of 627,000 units is the number of homes that would sell if this pace continued for the next 12 months.
The median sales price in June was $401,800, according to HUD and the Census Bureau, a 4.9% fall from May’s price of $422,700. When looking further out, the annual median sales price decrease fell 2.9% below the June 2024 median sales price of $414,000.
Those sales numbers reflect similar trends reported earlier this week by Realtor.com and the National Association of Realtors Home Sales Report.
The National Association of Home Builders (NAHB) pointed out the past two months have been the slowest sales pace since October of last year, as mortgage rates averaged above 6.8% in June. Buddy Hughes, NAHB chairman and a home builder and developer from Lexington, N.C., stated in a press release that the flat home sales highlight persistent weakness in the housing market despite seasonal expectations for growth.
“Elevated mortgage rates and sustained price levels continue to limit purchasing power, particularly among first-time and middle-income buyers,” Hughes stated.
Regionally, on a year-to-date basis, new home sales are down in all four regions, falling 25.6% in the Northeast, 8.5% in the Midwest, 1.6% in the South and 4% in the West, NAHB stated.
Wells Fargo Vice President and Economist Jackie Benson told Scotsman Guide that home builders have been relatively successful at keeping new home sales afloat by using incentives like price cuts and mortgage rate buy-downs.
“However, the recent slowdown in new home sales suggests that these incentives are proving less effective in the current environment of strained affordability and heightened economic uncertainty,” she said. “On top of weakening buyer traffic, builders are having to contend with a growing inventory-to-sales ratio, which is slashing builder confidence and forcing them to accept a lower price for their product.”
An economic indicator summary from Wells Fargo released Thursday called the new home sales “sluggish” and reported new home sales are down 4.3% year to date in the first six months of the year. Sales have decelerated across the country, with the Northeast region posting a 25.6% year-to-date decline in transactions. Sales in the South, West and Midwest receded by 1.6%, 4% and 8.5%, respectively.
