According to the U.S. Department of Housing and Urban Development and the U.S. Census Bureau, in a sign that the housing market continues to lead the economy during the coronavirus outbreak, sales of newly built, single-family homes rose to its highest pace since 2006, up 13.9 percent to a seasonally adjusted annual rate of 901,000 units in July 2020.
The July rate is 36.3 percent higher than the July 2019 pace. New home sales are up 8 percent on a year-to-date basis.
"This is exactly what NAHB's builder confidence survey has been indicating in recent months. 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," said Chuck Fowke, chairman of the National Association of Home Builders (NAHB). "Despite these positive conditions, affordability challenges remain especially as builders are dealing with building cost increases, including a dramatic rise in lumber costs in recent months."
"New home sales are benefitting from the suburban shift, as prospective buyers seek out affordable markets in order to obtain more residential space. Moreover, sales are increasingly coming from homes that have not started construction, with that count up 34 percent year-over-year," said NAHB Chief Economist Robert Dietz. "In contrast, sales of completed, ready-to-occupy homes are down almost 24 percent. These measures point to continued gains for single-family construction ahead."
A new home sale occurs when a sales contract is signed or a deposit is accepted. The home can be in any stage of construction: not yet started, under construction or completed. In addition to adjusting for seasonal effects, the July reading of 901,000 units is the number of homes that would sell if this pace continued for the next 12 months.
Inventory fell to a 4 months' supply, with 299,000 new single-family homes for sale, 8.8 percent lower than July 2019. The current months' supply is the lowest since 2013. Of the inventory total, just 61,000 are completed, ready to occupy. The median sales price was $330,600. The median price of a new home sale a year earlier was $308,300.
Regionally, on a year-to-date basis new home sales were up in all four regions: 21.7 percent in the Northeast, 20.4 percent in the Midwest, 4.8 percent in the South, and 8.7 percent in the West.