June saw new single-family home sales sink to a seven-month low, dropping by 0.6% from May to a seasonally adjusted annual pace of 617,000 units, according to the U.S. Census Bureau and the Department of Housing and Urban Development.
Sales also slid on a year-to-year basis, tumbling by 7.4% from June 2023.
June’s sales pace — the slowest since November — is especially disappointing when contrasted with projections from experts, who had anticipated a moderate rebound after two down months. A Reuters poll of economists had forecast June sales growing to 640,000 units.
Buyer movement is tepid despite weakening prices, with June marking the fifth consecutive month that new home prices have dropped year over year on a non-seasonally adjusted basis. The median new home price was $417,300, up 2.5% compared to one month prior.
Activity remains hampered by elevated interest rates, which remain high despite finally retreating back below 7% after spending most of May over that threshold, per Freddie Mac’s mortgage rate data.
Builders are doing their part to try to coax buyers from the sidelines, with 61% of respondents to an NAHB survey offering sales incentives. Thirty-one percent implemented price cuts, the largest share since January.
“Many potential buyers are remaining in a holding pattern due to elevated mortgage rates that averaged near 7% in June,” said Carl Harris, chairman of the National Association of Home Builders (NAHB). “However, moderating inflation suggests lower interest rates in the months ahead and that should bring more buyers off the sidelines.”
At 476,000 units, new home inventory remained stout in June. That’s a supply of 9.3 months at the current sales pace, though Jing Fu, director of forecasting and analysis at the NAHB, said that there remains a need for more construction in the long term because existing inventory, while gradually improving, is still depleted.
“Due to a lack of resale homes for sale, the combined inventory for new and existing single-family homes remains lean at a 4.7 months’ supply, according to NAHB estimates,” she noted.
