Homebuyers came back to the market in a big way in July as the sale of new single-family homes reached a seasonally adjusted annual rate of 739,000 units, according to data from the U.S. Census Bureau and the Department of Housing and Urban Development.
July’s numbers were a whopping 10.6% above the revised June annual sales rate of 668,000, and 5.6% above the estimated annual rate of 700,000 homes from July 2023. Sales of existing homes were also reported up in July, increasing 1.3% month over month.
The jump in homes sales marked a major turnaround for the housing industry, which had seen sluggish sales for both new and existing homes in recent months, due to high interest rates, rising prices and limited inventory. Interest rates on 30-year home loans, however, began to fall from the 7% range in early July to 6.54% by early August. The Federal Reserve has also signaled that the long-awaited interest rate cuts may begin in September, lowering the cost of borrowing even more.
Various industry experts praised the new-home numbers, pointing to the mortgage rate dip as the cause for the strong showing.
“The housing market’s bright spot, the new home market, continues to shine, outperforming the existing home market,” said Odeta Kushi, deputy chief economist at First American Financial Corporation. “July new-home sales increased to the highest level since May 2023, while existing-home sales have struggled to gain momentum, remaining near a more than 13-year low.”
But not all industry groups embraced July’s strong results. Officials at the National Association of Home Builders (NAHB) argued that market factors continue to discourage homebuyers and that July’s bump in homes sales may be an illusion.
“While mortgage rates moved lower in July, the census estimated gains for new home sales do not match recent industry survey data, including the NAHB/Wells Fargo Housing Market Index, which showed weakness in the current sales index,” said NAHB Chief Economist Robert Dietz. “The Census estimate of new home sales is often volatile and subject to revisions and it is possible that the July estimates for sales will be revised lower next month.”
Despite his cautious tone, Dietz said that the NAHB was still forecasting gradual improvements for the home building sector as the Fed eases monetary policy and mortgage rates trend lower.
The Census report found that the median sale price for new homes at the end of July was $429,800, up 3.1% from the prior month, but down 1.4% from this time last year.
The seasonally adjusted estimate for new houses on the market reached 462,000, which represented a supply of 7.5 months at the current sales rate. However, the NAHB maintained that the total home inventory, counting new and existing houses, was near 4.5 months at current sales levels, signaling that the market supply remained tight.
