New home sales in June fell to the lowest level since April 2020, reflecting declining builder sentiment as construction bottlenecks continue to slow new home building and raise housing costs.
Sales of newly built, single-family homes in June fell 8.1 percent to a 590,000 seasonally adjusted annual rate from a sharply downwardly revised reading in May, according to newly released data by the U.S. Department of Housing and Urban Development and the U.S. Census Bureau. New home sales are down 13.4 percent in 2022 on a year-to-date basis.
“Builders saw sales decline significantly as buyers were priced out of the market on higher interest rates and ongoing home building and development costs, including building materials,” said Jerry Konter, chairman of the National Association of Home Builders (NAHB) and a home builder and developer from Savannah, Georgia. “This is just the second time that new home sales have fallen below a 600,000 annual pace since October 2018, and this latest report also mirrors a sharp decline in builder confidence as noted in our latest survey.”
“Buyers are balking due to deteriorating affordability conditions and growing sticker shock,” said Danushka Nanayakkara-Skillington, NAHB’s assistant vice president for forecasting and analysis. “Only 14 percent of new home sales in June were priced below $300,000. A year ago, it was 27 percent. Meanwhile, inventory levels are elevated and will contribute to near-term production declines as the market finds a new balance.”
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 590,000 units is the number of homes that would sell if this pace continued for the next 12 months.
New single-family home inventory remained elevated at a 9.3 months’ supply, up 60.3 percent over last year, with 457,000 available for sale. However, only 39,000 of the new home inventory is completed and ready to occupy. The remaining have not started construction or are currently under construction.
The median sales price dipped to $402,400 in June, down 9.5 percent compared to May, but is up 7.4 percent compared to a year ago.
Regionally, on a year-to-date basis, new home sales fell in all four regions, down 12.1 percent in the Northeast, 24.8 percent in the Midwest, 12.6 percent in the South and 9.6 percent in the West.