Sales of newly built single‐family homes hit a seasonally adjusted annual rate of 708,000 in July, up one percent compared to the revised June rate of 701,000, according to a new report by the U.S. Census Bureau and the Department of Housing and Urban Development.
The increase comes after three months of decline.
“New home sales rebounded from a three-month slide, as employment gains and summer vacations motivated many families to look for a new home before the start of the school year,” George Ratiu, the manager of economic research at realtor.com said.
While the annual rate was down 27.2 percent compared to the July 2020 estimate, the data shows an ease to the strain on national inventory.
Per MarketWatch, the number of new homes for sale at the end of July saw a month-over-month increase of 5.5 percent and a year-over-year increase of 26 percent.
In addition, the seasonally‐adjusted estimate of new houses for sale at the end of July was 367,000, which equated to 6.2-months worth of supply on the market, the highest in over a year.
“It is promising that the overall trend in home sales is up from prior years and that the recent drop in sales has begun to reverse. This means that new home deliveries are coming closer to matching the demand generated by household growth,” Kelly Mangold of RCLCO Real Estate Consultants said.
However, due to the spike in material costs, prices of newly built homes are still high. Per the report, the median sales price of new homes sold in July was $390,500, a record high and nearly 19 percent increase from the same time last year.
“Even with the cost of lumber coming down in June, builders maintained higher prices, pushing the median new home price to a record of $390,500, an 18.4 percent jump from a year ago,” Ratiu said.
The annual adjusted rate isn’t expected to increase substantially until builder costs come down.
“It is not expected that this figure will grow meaningfully until some of the uncertainty about cost and delivery timelines can be resolved, because supply-chain issues and other constraints will continue to moderate the pace of deliveries and sales,” she said.
Rising costs continue to push homebuyers on a budget out of the market. Just 24% of new home sales in July were priced below $300,000, according Ratiu.
“Buyers embraced new homes over the past year due to a historically-low inventory of existing homes, and shifting preferences for larger homes, backyards and suburban neighborhoods. However, the spring spike in lumber costs pushed the price tag of new homes to a record high of nearly $400,000 in May, putting new construction out of budget for many buyers,” he said.