New home sales are solid in July

Despite rising mortgage rates, the limited supply of existing homes on the market helped push new residential sales forward in July.

Sales of new single‐family houses in July 2023 were at a seasonally adjusted annual rate of 714,000, according to estimates released jointly today by the U.S. Census Bureau and the Department of Housing and Urban Development.   

This is 4.4% above the revised June rate of 684,000.

Compared to a year ago, sales are sizzling and 31.5% ahead of the July 2022 estimate of 543,000. 

“New home sales were solid in July because of an ongoing housing deficit in the U.S. and a lack of resales stemming from many home owners electing to stay put to preserve their low mortgage rates,” said Alicia Huey, chairman of the National Association of Home Builders (NAHB) and a custom home builder and developer from Birmingham, Alabama. “But builders are still confronting many challenges, including rising mortgage rates, supply chain issues for electrical transformers, a dearth of skilled workers and elevated construction costs.”

The median sales price of new houses sold in July 2023 was $436,700, rising 4.8% from a median price of $416,700 in June. 

The average sales price in July was $513,000, a slight rise of 1.2% from the average June price of $507,300.

“Despite this monthly uptick, new home sales will likely weaken in August as higher interest rates price out prospective buyers,” said NAHB Chief Economist Robert Dietz. “Mortgage rates increased from 6.7% at the start of July to above 7% in August.”  

The seasonally adjusted estimate of new houses for sale at the end of July was 437,000.  This represents a supply of 7.3 months at the current sales rate. Supply stood at 7.5 months in June and 7.3 months in May.