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Today’s number you should know: 716,000.
That’s the annualized sales rate of new-built single-family homes in August. It’s a bit of a step down from the 751,000 sales pace in July, but it still puts builders on track for more home sales this year than last year’s 666,000. In fact, it would still be more than they sold in any year from 2008 to 2019.
What does it mean? Newly built homes are an unusually competitive option for buyers to consider right now. For one, builders have been staying a step ahead of the competition by using incentives, like interest-rate buydowns that reduce customers’ borrowing costs.
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For another thing: The median sale price of new houses is now actually slightly lower than the median price of existing houses, according to the latest data from the National Association of Realtors.
That’s helped new construction play an unusually large role in home sales right now: More than 1 in every 6 houses sold in August were newly built, up from just 1 in 8 in 2022.
The other key number to know this week: 0.2 percent.
That’s the monthly growth (seasonally adjusted) in home prices this July, according to the latest S&P Case Shiller Index data.
If that sounds pretty close to 0, well, it is. Home price growth is still in a cooldown pattern. Annual home price appreciation dropped this month to 5 percent.
One other thing to keep in mind is that Case-Shiller is actually a three-month moving average, so this data is really covering home sales in May, June and July. And remember, back in May, mortgage rates were still over 7 percent for most borrowers.
All of this paints a picture of a cooling-down year for the housing market.
What does it all mean for homebuyers? It means that high interest rates really put a damper on the housing market this spring, and they’re no longer facing a ton of competition if they want to buy now.
What does it mean for homeowners? Well, this is a bit of payback for how much home prices climbed from 2019 to 2022. That was unsustainable; we needed a bit of a correction, and the market is working its way back to normal.
Additional resources:
- New residential sales and the interactive FRED version
- Existing home sales (note that it’s just single-family houses, to be apples to apples with the new home sales report)
- Case-Shiller release
- SA MoM Change chart on FRED
- NSA YoY Change chart on FRED
Jeff Tucker is the Principal Economist for Windermere Real Estate in Seattle, Washington. Connect with him on X or Facebook.
