New Home Sales Slip Again, Surprising Economists

New home sales slipped further last month, throwing off analyst expectations and hitting a 7-month low.

That’s according to data from the U.S. Census Bureau and the Department of Housing and Urban Development, which reported sales ticking down by 0.6% to a seasonally adjusted annual rate of 617,000 in June, down from the month priors’ revised rate of 621,000.

This decline is much calmer than May’s more than 11% drop off, but still a surprise. Economists surveyed by Bloomberg predicted a rate of 640,000.

Sales were 7.4% below the June 2023 estimate of 666,000.

At the end of the month, 476,000 new homes were for sale, an improvement. At the current sales rate, this represents a 9.3-month supply.

The median sales price of new houses sold in May 2024 was $417,300, while the average was $487,200, both decreases. Sale prices are falling somewhat as inventory increases, but the actual impact on buyers depends on location.

Pandemic hotspots like Texas and Florida are seeing adjustments faster than the West and Northeast, thanks to a combination of lenient construction laws leading to huge amounts of new inventory and fears over climate-related disasters deterring out-of-state immigration.

Overall, however, buyers should expect prices to keep moving up for the foreseeable future.

“Even though price growth has been slowing down, falling mortgage rates and lower-than-usual inventory levels are likely to keep prices ticking up in the coming months,” said Redfin Senior Economist Sheharyar Bokhari.

Rates are on a downward swing but remain in the mid-6%s, still higher than necessary to encourage a flood of new activity. Sellers who have to take on a higher interest rate to move are loathe to price adjust, leaving many homes sitting on the market, untouched by buyers who consider them too expensive.