The numbers: Sales of newly built homes in the U.S. dipped in June as buyers continue to deal with an unaffordable housing market.
Buyers are constrained by high home prices and elevated mortgage rates. Sales of new homes are at the lowest level since November 2023.
Sales of newly built homes in the U.S. fell 0.6% to an annual rate of 617,000 in June, from a revised 621,000 in the prior month, the Commerce Department reported Wednesday.
The number is seasonally adjusted and refers to how many homes would be built over an entire year if builders continued at the same pace every month.
The pace fell short of expectations on Wall Street. Economists surveyed by Dow Jones Newswires and the Wall Street Journal expected new-home sales to increase to 640,000.
The rate of new-home sales was mixed across the nation, falling the most in the Midwest and the Northeast.
The data from June were revised to 617,000 from an initial reading of 619,000.
New-home sales data are volatile month over month and are often revised.
Key details: The median sales price of a new home sold in June rose to $417,300 from $407,100 in the prior month.
The supply of new homes for sale rose to 2.2% between May and June. New-home inventory in June was at the highest level since October 2022.
New-home sales fell in the Midwest and Northeast but inched back up in the South and the West.
Overall, sales of new homes were down 7.4% compared with the previous year.
Big picture: The entire residential real-estate industry, including mortgage brokers, real-estate agents and home builders, are feeling the effects of high mortgage rates and home prices.
While the national figures don’t show a dip in home prices in June, builders in July said they have cut prices and increased incentives to home buyers in order to boost sales. Builder confidence in the market is at a seven-month low.
Builders also have a significant supply of homes to sell, as seen by elevated inventory levels.
What are economists saying? “The bigger picture here is that the spring bounce in sales appears to have reversed. This is partly a response to the sharp 40 [basis point] rise in mortgage rates in April, which has since steadily unwound,” Ian Shepherdson, chairman and chief economist at Pantheon Macroeconomics, wrote in a note.
“Combined existing and new home sales in June was not far below the readings seen late last year but was the slowest monthly pace since 2011,” Stephen Stanley, chief economist at Santander U.S., wrote in a note.
High home prices and rates “combined to torpedo affordability, and homebuying demand has deteriorated,” he added, which is why inventory has increased. Stanley also noted that the number of completed new homes on the market is at the highest level since 2009.
Market reaction: Most major home builder stocks, such as D.R. Horton, KB Home, Lennar and Toll Brothers, were down in early trading on Wednesday. The yield on the 10-year Treasury note was under 4.3%.
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