Sales of newly built, single-family homes rose one percent in July to a 708,000 seasonally adjusted annual rate, according to newly released data by the U.S. Department of Housing and Urban Development and the U.S. Census Bureau. This data reflected an expected upward revision to the June new home sales estimate.
“New home sales have leveled off this summer after a period of rising costs and strong demand,” said Chuck Fowke, chairman of the National Association of Home Builders (NAHB) and a custom home builder from Tampa, Florida.
“While new home sales are up 6.9 percent on a year-to-date basis, they are down 27 percent in July compared to the same time last year,” said NAHB Chief Economist Robert Dietz. “Builders will need to watch local home prices relative to incomes, given recent gains in building materials and other construction costs.”
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 July reading of 708,000 units is the number of homes that would sell if this pace continued for the next 12 months.
Inventory continues to rise to more balanced market conditions of a 6.2-month supply, with 367,000 new single-family homes for sale, 26.1 percent higher than July 2020. While inventory is rising, a growing share is of homes that have not started construction. As of July 2021, 29 percent of new home inventory consists of homes not started construction, compared to 20 percent a year ago.
The median sales price was $390,500, up 18.4 percent from the $329,800 median sales price posted a year earlier, due to higher development costs, including materials.
Regionally, on a year-to-date basis, new home sales rose in all four regions, up 7.5 percent in the Northeast, 10.6 percent in the Midwest, 9.1 percent in the South and 0.5 percent in the West. These significant increases are due in part to lower sales volume during the COVID-19 crisis a year ago.