The sale of new single-family homes declined by 5.3 percent from May to June, according to the latest data released Wednesday from the U.S. Census Bureau and the U.S. Department of Housing and Urban Development. The seasonally adjusted annual rate of 631,000 new homes sold was the lowest since October 2017.
“The Census Bureau notes in the release that ‘it takes 6 months to establish a trend for new houses sold’ as they are among the most volatile and revision prone economic data series,” said Tendayi Kapfidze, the chief economist at Lending Tree.
“At LendingTree we prefer the 3-month average to balance timeliness with information value,” he added. “The 3-month average of 646,000 is at the weakest level since February and coupled with weakness in existing home sales may be signaling a peak in home sales.”
Despite the month-over-month drop and sales falling in every region but the Northeast, new home sales are still 2.4 percent ahead of where they were in June of 2017.
A piece of good news for an inventory-starved market, is that the seasonally-adjusted estimate of new houses for sale at the end of June was 301,000 – which represents a supply of 5.7 months at the current sales rate.
According to Kapfidze, it’s the highest since May 2009, but margin pressures and tariffs from the Trump administration could further strain inventory, especially at lower price points.
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“We had previously expected the tax cuts to improve builder margins by 10-15 percent, which we anticipated may have led builders to consider increasing activity at the lower-end of the market where inventory challenges are particularly acute,” said Kapfidze. “The tariffs may negate this benefit.”
The price of the median new single-family home dropped to $302,100, the lowest point since February 2017. Climbing interest rates may be leading to a drop in prices, Kapfidze believes.
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