New Home Sales See Minor Increases in June
Sales of newly constructed detached homes in the U.S. saw a slight uptick in June; however, they fell short of expectations, largely due to ongoing concerns about mortgage affordability.
According to reports from the U.S. Census Bureau and the Urban Development Agency, new home sales in June rose by 0.6% to reach 627,000. This is an annual increase of 0.6%, though economists had anticipated figures around 650,000. Comparatively, this marks a 6.6% drop from June 2024.
The June numbers align with a revised May figure of 623,000, marking the slowest two-month stretch for new home sales since October 2024, indicating a second straight month of subdued activity.
Throughout much of this year, mortgage rates have steadily increased, averaging nearly 6.8% for a 30-year fixed rate over recent months. Meanwhile, the Federal Reserve has maintained its benchmark interest rates unchanged since December 2024, citing concerns over inflation and the overall financial landscape.
Former President Donald Trump has consistently urged the Fed to lower rates, arguing that the current stringent policies are hindering housing, investment, and consumer spending. His criticisms of Federal Reserve Chairman Jerome Powell have been pointed, calling him “too late” and implying political motivations behind the Fed’s decisions.
The number of new homes available for sale at the end of June rose to 511,000, the highest level seen since 2007. At the existing sales pace, this suggests a supply duration of 9.8 months, notably exceeding historical averages of 9.7 months seen in May. A balanced market typically has around four to six months of supply, as noted by housing analyst Bill McBride. For context, the highest recorded supply was 12.2 months in January 2009, while the lowest was 3.3 months in August 2020.
The median price for new homes fell to $401,800 in June, a decrease of 4.9% from May and down 2.9% from a year ago. The average selling price also dropped, settling at $501,000, which is 2.0% lower than in May.
As per the National Association of Home Builders, the completed inventory—homes that are built and ready for occupancy—has increased to 114,000 units, marking a 21.3% rise since June 2024.
“The last two months have marked the slowest sales pace since October last year,” stated the NAHB. With mortgage rates averaging above 6.8% in June, many first-time middle-income buyers are finding their purchasing power limited.
Looking at regional sales, there was a 5.1% increase in the South and a 6.3% rise in the Midwest during June. However, the West experienced an 8.4% drop, while the Northeast saw a significant 27.6% decline. Overall, sales have been decreasing across all four regions since the beginning of the year compared to the same time last year.
