New home sales drop in July

Housing sales continued to decline in July as potential home buyers continue to face inflation and higher mortgage rates.

Sales of new single‐family houses in July 2022 fell 12.6% to a seasonally adjusted annual rate of 511,000 from the revised June rate of 585,000, according to estimates released jointly today by the U.S. Census Bureau and the Department of Housing and Urban Development.   

The latest report also places sales nearly 30% below the July 2021 estimate of 726,000.

According to the National Association of Home Builders (NAHB), the latest report is the lowest level since January 2016.

“The disappointing sales pace mirrors an ongoing decline in builder sentiment as elevated mortgage rates and higher construction costs are pushing more consumers out of the market, particularly entry-level buyers,” said Jerry Konter, NAHB chairman and a home builder and developer from Savannah, Ga.

The median sales price of new houses sold in July was $439,400 rising nearly 6% above the June median price of $414,900 but down 5% from $462,100 in July 2021.

The average sales price in July shot up nearly 20% to $546,800 compared to an average price of $457,300 in the prior month. Prices in July are up 18.3% compared to July 2021 and an average price of $462,100.

“The sharp drop in new home sales is another clear indicator that housing is in a recession,” said Danushka Nanayakkara-Skillington, NAHB’s assistant vice president for forecasting and analysis. “The combination of higher prices and increased interest rates are generating a notable slowing of the housing market.”

The seasonally‐adjusted estimate of new houses for sale at the end of July was 464,000, representing a supply of 10.9 months at the current sales rate.

Here’s how sales of new single-family home performed by region:

• In the Northeast, sales increased 13.3% compared to the prior month but fell 37% on a year-over-year basis.
• Sales in the Midwest dropped 20.6% in July and slumped 22.9% on a year-over-year basis.
• The Southeast saw sales decline 12.1% in July while sales plummeted nearly 29% on a year-over-year basis.
• In the West, sales were down 13.3% for the month and saw a 50.3% dropoff from July 2021 sales.

Last week, the National Association of Realtors (NAR) reported that existing-home sales fell 5.9% to a seasonally adjusted annual rate of 4.81 million.

Year-over-year, existing-home sales fell 20.2% from 6.03 million in July 2021.

Additionally, existing single-family home sales declined to a seasonally adjusted annual rate of 4.31 million in July, down 5.5% from 4.56 million in June and down 19% from one year ago, the NAR reported.