Homebuilders remain squeezed by high mortgage rates.
This is based on U.S. Census Bureauof The June new home sales report showed that transaction levels fell to a seasonally adjusted 617,000 units. This represents a 7.4% annual decrease and a 0.6% month-on-month decrease, marking the second consecutive month that the pace of home sales has declined.
Falling sales have led to a rapid buildup of unsold inventory. At the current sales pace, supply will increase 20.8% year-on-year to 9.3 months. This is the second month in a row that supply has increased.
The increase in supply has yet to have a significant impact on new home sales prices. The June median was flat at $417,300, down $300 from June 2023 and up 2.5% from the revised May 2024 figure.
“Spikes in mortgage rates earlier this spring weakened demand for housing, leading to slower sales and increased resale and new home inventory levels,” Zillo Senior economist Orphe Divounguy said in a statement. “But homes that are reasonably priced and marketed are still selling relatively quickly.”
Growth in new home supply in existing residential markets has been less dramatic. Based on current sales report for June National Association of Realtors (NAR), sales volume fell, but prices increased by 4.1% year-on-year, and the number of months of supply dropped significantly to 4.1.
“While new home inventory remained elevated in June, with a 9.3-month supply at the current construction pace, more construction will be needed in the long term as existing inventory remains relatively low,” the company forecast. Analysis Director Fu Jing said. National Association of Home Builders (NAHB) said in a statement.
“According to NAHB estimates, total inventory of new and existing single-family homes remains low, with only a 4.7-month supply due to a lack of resale homes.”
New home sales figures are jaw-dropping in two regions of the country. Sales in the Midwest increased 32.6% year-on-year in June to 81,000 vehicles. This regional pattern continued to take shape throughout the year. In contrast, new home sales in the Northeast fell a staggering 63.6% year-on-year to just 12,000 units.
“Things are better in places where homes are more affordable, like the Midwest, but more expensive markets also make it harder to grow sales from levels that aren’t very high,” house line Chief Analyst Logan Mohtashami said.
Sales in the South also saw a significant, if less dramatic, decline of 12.2% to 375,000 units, although this figure was the same as May’s revised figure. Sales volume in the western region increased to 149,000 vehicles, an increase of 2.8% from last year and an increase of 1.4% from the previous quarter.
