ARLINGTON, Va.—New home sales rose 1% in July over June's upwardly revised rate of 701,000 annualized units.
"New home sales posted their first gain in three months as the housing market transitions into a new phase," said Curt Long, NAFCU’s chief economist and vice president of research. "Sales levels have settled into a narrower range lately following the rollercoaster of the prior 12 months."
Sales rose in two Census regions in July, with the West rising 14.4% and the South rising 1.3%. The “volatile” Northeast fell 24.1%, followed by the Midwest (-20.2%).
Compared to a year ago, sales fell in all Census regions, but those numbers are still skewed by the boom in home sales after the lifting of COVID-19 lockdowns this time last year, the NAFCU analysis noted.
"Builders report that foot traffic is down as prospective buyers remain reluctant to wade into a market when prices are up nearly 20% from a year ago, and those that do are beginning to find more options in the existing home market," added Long. "The outlook for builders remains positive, and they are beginning to address their large backlog of projects. The number of homes with permits for construction but where builders have not yet broken ground is up 45% since February 2020. As those homes hit the market, it should help to relieve some of the pricing pressures."
Six Months of Supply
Based on current month sales, there were 6.2 months of supply in July, up 0.2 months from June. The Number of unsold homes left on the market was up to 367,000 units on the month, representing a 5.5% increase from year-ago inventory levels.
The median new-home price, non-seasonally adjusted, rose from $370,200 in June to $390,500 in July; this month's prices are up 18.4% from a year ago.
"NAFCU remains optimistic that sales levels will improve over the rest of 2021 as prices gradually come back to earth," concluded Long.