There are a few important reports on the U.S. housing market worth mentioning this morning. First, sales of new single‐family homes in June rose by 7.0 percent to a seasonally adjusted annual rate of 646,000 units, according to new data from the Census Bureau. That was below estimates and the May print was revised sharply lower. However, this was still the best June for new home sales since 2007, and 2019 remains on track to be the best year for annual sales in more than a decade. Further, over the past three months new home sales have risen at an average 636,000 unit pace, comfortably above 2018’s mean 615,000 unit pace. All of this is encouraging for the longevity of the economic expansion in America because new home sales are often viewed as a leading indicator that typically weakens considerably ahead of a recession.
Elsewhere, existing home sales, which account for about 90 percent of the U.S. housing market, fell by 1.7 percent in June to a seasonally adjusted annual rate of 5.27 million units, according to the National Association of Realtors (NAR). That was worse than expected but the May print was revised higher. The average time it takes for a property to sell lifted slightly to 27 days in June, and 56 percent of homes sold were on the market for less than a month. Altogether this suggests that sales conditions remain healthy but the recent decline in mortgage rates has yet to provide any meaningful boost. One explanation could be that affordability is still a challenge, especially with the the median selling price climbing to a record high in June. Inventory has improved slightly, and the rate of price appreciation has slowed, but gains in home values continue to easily outpace wage growth. Lawrence Yun, NAR’s chief economist, added that an “imbalance persists for mid-to-lower priced homes with solid demand and insufficient supply, which is consequently pushing up home prices.”
Sources: Econoday, U.S. DoC, Calculated Risk, NAR, FRBSL
Post author: Charles Couch