New Home Sales Reach Highest Level Since Great Recession
In a sign that the housing market is leading the economy during the coronavirus outbreak, sales of newly built, single-family homes rose to their highest level since the Great Recession, up 13.8% to a seasonally adjusted annual rate of 776,000 units in June, according to newly released data by the U.S. Department of Housing and Urban Development and the U.S. Census Bureau. The June rate is 6.9% higher than the June 2019 pace.
“While Wall Street may have been expecting a smaller gain, anyone following the NAHB/Wells Fargo Housing Market Index would know these numbers are in line with what we are hearing from builders,” said NAHB Chairman Chuck Fowke. “Builders are moving to ramp up production to meet growing demand.”
“Along with rising builder sentiment, we are seeing increasing consumer demand in the suburbs, exurbs and rural areas,” said NAHB Chief Economist Robert Dietz. “At the same time, builders are dealing with supply-side concerns such as rising material costs, particularly lumber, which surpassed its 2018 price peak this week. Nonetheless, low inventory levels point to construction gains ahead.”
A new home sale occurs when a sales contract is signed or a deposit is accepted. The home can be in any stage of construction: not yet started, under construction or completed. In addition to adjusting for seasonal effects, the June reading of 776,000 units is the number of homes that would sell if this pace continued for the next 12 months.
Inventory fell to a 4.7 months’ supply, with 307,000 new single-family homes for sale, 7% lower than June 2019. The current months’ supply is the lowest since 2016. Of the inventory total, just 69,000 are completed, ready to occupy. The median sales price was $329,200. The median price of a new home sale a year earlier was $311,800.
Regionally, on a year-to-date basis new home sales were up in all four regions: 22% in the Northeast, 12.6% in the Midwest, 0.2% in the South, and 3.1% in the West.
NAHB Chief Economist Robert Dietz provides further analysis in this Eye on Housing blog post.