U.S. new-home sales unexpectedly fall to lowest since April 2020

By Olivia Rockeman | Bloomberg

Sales of new U.S. homes dropped unexpectedly in June to the lowest since April 2020, showing a further weakening in demand against a backdrop of elevated prices and tight supply.

Purchases of new single-family homes fell 6.6% to a 676,000 annualized pace following a downwardly revised 724,000 in May, government data showed Monday. The median estimate in a Bloomberg survey of economists called for a 796,000 rate.

Surging construction costs for everything from labor to transportation to lumber have held back homebuilding in recent months, contributing to skyrocketing prices while the supply of homes remains limited. Some of those supply-chain pressures may ease in the coming months, and lumber prices have retreated quickly from their recent peak.

Biden administration officials held a meeting with homebuilding industry representatives recently, with a goal of addressing the housing supply shortage and helping to ease pressures that spurred the surge in prices.

The Commerce Department’s report showed the median sales price of a new home rose 6.1% from a year earlier, to $361,800.

Housing inventory

The number of homes sold in June and awaiting the start of construction — a measure of backlogs — eased from a month earlier to 229,000, the report showed. The total number of homes sold with construction underway slipped to 289,000 in June.

There were 353,000 new homes for sale in June, the most since the end of 2008. At the same time, only 10% of those houses were already completed. More than 100,000 had not been started.

At the current sales pace, it would take 6.3 months to exhaust the supply of new homes, compared with 5.5 months in the prior month.

A separate report last week showed sales of previously-owned homes rose for the first time in five months in June as housing inventory improved slightly.

Digging deeper

  • Sales fell in three of four in U.S. regions. Purchases slumped about 28% in the Northeast, dropped 7.8% in the South and fell 5.1% in the West
  • New-home purchases account for about 10% of the market and are calculated when contracts are signed. They are considered a timelier barometer than purchases of previously-owned homes, which are calculated when contracts close
  • The new-homes data are volatile; the report showed 90% confidence that the change in sales ranged from a 23.1% decline to a 9.9% increase

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