Not surprisingly considering current housing market dynamics, US new home sales topped estimates in data released on Wednesday.
July’s 714,000 annual pace tipped by the government figures was comfortably ahead of the 703,000 consensus. The range of estimates from nearly five-dozen people who get paid to draw numbers out of hats was 670,000 to 730,000.
Figures for May and June were revised lower. July’s headline print, as initially reported anyway, counts as the briskest pace since February of 2022.
Last month’s increase was the fourth in five months.
The narrative scarcely needs repeating. Elevated mortgage rates have sidelined sellers — homeowners who need to finance a portion of any trade-up aren’t keen to surrender four- and five-hand mortgages for a seven-handle.
So, resale supply is nonexistent, leaving new construction as the only option for many would-be buyers. The vacancy rate in America dropped to a new low in Q2.
Data out Tuesday showed existing home sales fell again last month, while figures released on Wednesday morning found mortgage rates rising to the highest levels since December of 2000. A gauge of demand for single-family purchases fell to a 28-year low.
Although builder sentiment slipped this month for the first time in 2023, this is still a good time to be in the home-building business. Just ask Toll Brothers which beat estimates, topped margin forecasts and raised its outlook in results released after the bell on Tuesday. On Wednesday’s call, the company said August was unusually strong.
The median new home price in July was $436,700, down almost 9% YoY. That was the fourth straight decline in median prices when measured against the same month a year ago.
Prices rose $20,000 from June to July, though, and the average price for a new home was over half a million dollars for the fourth month in five. Average prices haven’t been consistently below half a million since 2021.
New home sales are on track for 643,000 this year, better than last year’s full-year total of 641,000.
Months’ supply in July was 7.3, more than double the record lows seen in October of 2020 but down meaningfully from levels seen this time last year.
