Apparently the new-home sales market didn’t want the existing-home sector to hog the good July sales news.
Sales of newly built single-family homes vaulted to their highest pace since 2006, reaching a seasonally adjusted annual pace of 901,000 units in July. That’s according to the U.S. Census Bureau and Department of Housing and Urban Development (HUD), which also upwardly revised June’s sales pace to an annualized rate of 791,000.
That brought July’s monthly sales gain to 13.9%, to go along with a increase of 36.3% from the pace set in July 2019. Year to date, new-home sales are up 8%.
This is exactly what NAHB’s builder confidence survey has been indicating in recent months,” said Chuck Fowke, chairman of the National Association of Home Builders (NAHB). The NAHB’s Housing Market Index, a measure of builder sentiment maintained jointly with Wells Fargo, matched an all-time high level this month.
“Consumers are being driven by low interest rates, a growing focus on the importance of housing and a shift in buyers seeking homes in lower density areas,” Fowke added.
“New home sales are benefiting from the suburban shift, as prospective buyers seek out affordable markets in order to obtain more residential space,” echoed Robert Dietz, the NAHB ‘s chief economist. “Moreover, sales are increasingly coming from homes that have not started construction, with that count up 34% year over year. In contrast, sales of completed, ready-to-occupy homes are down almost 24%. These measures point to continued gains for single-family construction ahead.”
Sizzling sales are helping push prices higher, with the median sales price of new houses sold in July at $330,600 — surpassing June’s median price of $329,200 as the largest median sales price by month in 2020. Year over year, the median price of a new home has risen 7.2%, reflecting not only torrid sales but also rising construction costs; Fowke, of late, has been vocal about the significant increase in lumber prices that builders have been dealing with in recent months.
Also contributing to growing prices has been the steadily short supply of new homes to buy. The Census and HUD estimated a seasonally adjusted figure of 299,000 new houses for sale at the end of July, equating to a 4.0-month supply at the current sales rate. That’s down 1.6% from June and 8.8% from July 2019.