A report released this morning by the U.S. Census Bureau showed that sales of new single-family homes in America plunged by 9.4 percent in July to a seasonally adjusted annual rate of 571K units. That was significantly worse than economists expected and the largest monthly decline since August 2016. The prior month’s figure was revised slightly higher but year-over-year growth still collapsed to -8.9 percent, the worst annual decline since June 2014.
Regionally, new home sales in July rose in the Midwest (+6.2 percent) but fell in the Northeast (-23.8 percent), the West (-21.3 percent), and the South (-4.1 percent). The inventory of new single-family homes in July lifted to 276,000, and months’ supply rose to 5.8 based on the current sales pace. The median selling price of new houses sold in July was $313,700, up 6.3 percent from this same period last year. Overall this was a disappointing report but it is important to remember that new home sales are quite volatile, meaning that the longer-term trends are where the focus should be. Moreover, new home sales tend to head sharply lower ahead of a recession and fortunately this has yet to occur during the current business cycle.
Sources: Econoday, U.S. Census Bureau, FRBSLPost author: Charles Couch