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Sales of newly built single-family homes dipped modestly in June but remained significantly elevated from their 2022 levels, according to data released Wednesday by the U.S. Census Bureau.
New-home sales drooped 2.5 percent from May to a seasonally adjusted rate of 697,000 — 23.8 percent higher than June 2022, according to the Census data.
The median sales price of new homes sold in June clocked in at $415,400 — down from the May median of $416,300 — while the average sales price hovered at $494,700, an increase from the May average of $487,300.
Consumer interest in newly built homes has surged in 2023 as a slew of new construction has come on the market — inspiring builders to offer additional incentives — while homebuyers are faced with a historical shortage of existing inventory.
‘”With inventory of existing homes dwindling, many home shoppers are turning up empty-handed,” Zillow Senior Economist Nicole Bachaud said in a statement. “Those buyers who turn to the new construction market are seeing more available options to snatch up, leading to strong new home sales compared to a year ago.”
“With many builders offering incentives like rate buydowns, new construction is an attractive offer for buyers who are seeking affordability,” Bachaud added. “The new construction market will continue to play a vital role in unlocking buyers who are left with few other options as builders continue to churn out much needed inventory into this market.”
Builders are facing far less supply-chain headaches with building materials than a year ago, experts noted, allowing some to feel confident enough to sell homes before they are built.
“As costs of materials get under control, homebuilders are more comfortable selling homes before construction has started,” NerdWallet home and mortgage expert Holden Lewis said in a statement. “Of the 60,000 new homes sold in June, 13,000 were on lots where ground hasn’t yet been broken. It’s a sign that homebuilders and homebuyers feel confident in the economy.”
The increased demand for newly built homes comes amid the mortgage-rate-induced stalemate depriving the housing market of new inventory.
Over 90 percent of homeowners with mortgages have a rate below 6 percent, while more than 80 percent enjoy a rate below 5 percent. The average 30-year fixed mortgage rate was 6.43 percent in May, up from 5.23 a year earlier and the record low of 2.65 percent seen in 2021.
Homeowners with low mortgage rates have proven unwilling to list their homes and contend with 20-year high mortgage rates unless they absolutely have to, resulting in the lowest inventory levels seen in a decade.
