New Home Sales Tumble in July

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The U.S. Census Bureau and the Department of Housing and Urban Development reported Wednesday morning that sales of new homes in July slipped to a seasonally adjusted annual rate of 571,000, a decrease of 9.4% below the revised June rate of 630,000 and a drop of 8.7% compared with the July 2016 rate of 627,000. The consensus estimate from a survey of economists expected a rate of around 610,000. The June rate was revised upward by 20,000.

At the peak in 2005, new home sales posted a seasonally adjusted annual rate of nearly 1.4 million.

The Census Bureau also reported that the median sales price for new homes sold in July rose by $3,100 from $311,600 in June to $312,700, and the average sales price rose by just $1,200 to $371,200. Year over year, the median home price is up $18,700 and the average is up $16,200.

At the end of July the number of new homes for sale totaled 276,000 and represented a supply of 5.8 months at the current sales rate.

In July, 47% of the estimated 49,000 monthly sales were sales for homes priced at less than $300,000. The percentage is flat with the June rate. Sales of homes priced between $300,000 and $399,999 rose by a point to 23% of all sales. Sales of homes in the range of $400,000 to $499,999 rose from 11% of sales to 14%, and sales fell from 15% to 12% for homes sold in a range of $500,000 to $749,999. Home sales for properties priced above $750,000 accounted for 5% of all new home sales in both June and July.

Price increases were modest month-over-month, a good sign for potential first-time buyers. Inventories rose by 4,000 month over month and are up 39,000 year over year. The number of houses for sale in July is the highest total so far this year.