New home sales step back in June

New home sales retreated in June to a seasonally adjusted rate of 590,000, according to estimates released today by the U.S. Census Bureau and the Department of Housing and Urban Development.   

The latest report is 8.1% below the revised May rate of 642,000 and down 17.4% compared to the June 2021 estimate of 714,000. 

“Builders saw sales decline significantly as buyers were priced out of the market on higher interest rates and ongoing home building and development costs, including building materials,” said Jerry Konter, chairman of the National Association of Home Builders (NAHB) and a home builder and developer from Savannah, Ga. “This is just the second time that new home sales have fallen below a 600,000 annual pace since Oct. 2018, and this latest report also mirrors a sharp decline in builder confidence as noted in our latest survey.”

And as sales fall, so are home prices. 

The median sales price of new houses sold in June 2022 was $402,400 falling more than 9% compared to a median price of $444,500 in May.

The average June sales price was $456,800, declining 11.12% from an average sales price of $514,000 in the previous month.

“Buyers are balking due to deteriorating affordability conditions and growing sticker shock,” said Danushka Nanayakkara-Skillington, NAHB’s assistant vice president for forecasting and analysis. “Only 14% of new home sales in June were priced below $300,000. A year ago, it was 27%. Meanwhile, inventory levels are elevated and will contribute to near-term production declines as the market finds a new balance.”

The seasonally‐adjusted estimate of new houses for sale at the end of June was 457,000.  This represents a supply of 9.3 months at the current sales rate, climbing from a supply of 7.5 months in May.

Here’s how new home sales performed by region:

• In the Northeast, sales fell 5.3%. Year-over-year, sales declined 37.9%.
• In the Midwest, sales jumped 42.3% but were down 22.1% year-over-year.
• In the South, sales dipped 2% as year-over-year sales fell 8.7%.
• In the West, sales tumbled 36.7% as year-over-year sales declined 32.9%.