New home sales jumped in July as homebuilders continue to experience a boom, according to new data from the U.S. Census Bureau and the Department of Housing and Urban Development.
Sales rose by 4.4% to a seasonally adjusted annual rate of 714,000 and 31.5% from the same time last year, the highest pace since February 2022. Economists surveyed by Reuters had expected an increase to just 705,000, so this month bested expectations.
The seasonally adjusted estimate of new houses for sale was 437,000, representing a supply of 7.3 months at the current sales rate.
The median price for a new home was $436,700, while the average sales price was $513,000.
New home sales appear to have corrected after a sharp dip last month, originally reported as a 2.5% dip but revised down further this month to a rate of 684,000. Monthly data is volatile and often revised. Construction accounted for nearly one-third of all inventory in Q2. Historically it accounts for only 10%.
“New construction is the only option for many buyers,” Shauna Pendleton, a Redfin real estate agent in Boise, Idaho, said. “A lot of buyers want to secure a home now because they’re worried prices are going to go back up, and new construction is more plentiful, with perks that are hard to pass up.”
Existing home sales slid to a 6-month low in the same period.
With nowhere else to turn, new home purchase activity is propping up originations, which rose to their highest level since May last week.
“New home sales have been driving purchase activity in recent months as buyers look for options beyond the existing home market. Existing-home sales continued to be held back by a lack of for-sale inventory as many potential sellers are holding on to their lower-rate mortgages,” MBA VP and Deputy Chief Economist Joel Kan said.
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