New Home Sales in U.S. Reach Highest Levels Since 2008 Market Crash
According to the U.S. Department of Housing and Urban Development and the U.S. Census Bureau, sales of newly built, single-family homes in the U.S. rose 3.5 percent in June 2016 from an upwardly revised May 2016 reading to a seasonally adjusted annual rate of 592,000 units. New home sales are up 9.3 percent in the second quarter of 2016 from the first quarter.
"This positive report is in line with our forecast for a gradual recovery of the housing market," said NAHB Chairman Ed Brady, a home builder and developer from Bloomington, Ill. "For builders to meet the increasing demand for housing, we need to address supply-side headwinds such as shortages of lots and labor."
"The fact that new home sales reached their highest pace in over eight years shows the housing market is gaining momentum," said NAHB Chief Economist Robert Dietz. "The market should continue to firm throughout the year, propelled by low mortgage interest rates and solid growth in employment."
The inventory of new homes for sale was 244,000 in June, which is a 4.9-month supply at the current sales pace. The median sales price of new houses sold was $306,700.
Regionally, new home sales rose by 10.9 percent in the West and 10.4 percent in the Midwest. Sales fell by 0.3 percent in the South and 5.6 percent in the Northeast.
Realtor.com's Chief Economist Jonathan Smoke also commented, "Although the key observations for June are statistically insignificant, the year-to-date trend is clearly positive: Actual new homes sold reported so far this year are up 11 percent over the first half of 2015. Plus the increase in the seasonally adjusted annualized rate of new home sales beat analyst expectations. At the June pace of new home sales, the market is up 25 percent over last year, when mortgage rates were rising. However, we unfortunately aren't seeing signs that builders are expanding offerings of more affordably priced homes."
Smoke further stated, "There was an estimated 54,000 new home contracts signed in June - the month's highest volume since June 2007, when there was a surplus of houses for sale. The key difference between then and now is that 40 percent of the new homes sold in 2007 were already built when they were purchased. This June, only 31 percent of new homes sold were completed, indicating that builders are being more conservative. At this point in time, in order to see a substantial gain in sales of new homes, builders need to find a way to build affordable houses that will appeal to first-time buyers."