New home sales tick upward in July

But the latest report shows sales lagging by more than 27% below the July 2020 estimate.
a large lawn in front of a house

Despite headwinds, new single-family home sales increased 1% to a seasonally adjusted rate of 708,000 from the revised June rate of 701,000, the U.S. Department of Housing and Urban Development and the U.S. Census Bureau reported today.

The latest report is 27.3% below the July 2020 estimate of 972,000, however.

“New home sales have leveled off this summer after a period of rising costs and strong demand,” said Chuck Fowke, chairman of the National Association of Home Builders (NAHB).

Inventory continues to rise to more balanced market conditions of a 6.2-month supply, with 367,000 new single-family homes for sale, 26.1% higher than July 2020.

While inventory is rising, a growing share is of homes that have not started construction. As of July 2021, 29% of the new home inventory consists of homes that have not started construction, compared to 20% a year ago.

The median sales price was $390,500, up 18.4% from the $329,800 median sales price posted a year earlier, due to higher development costs, including materials.

“While new home sales are up 6.9% on a year-to-date basis, they are down 27% in July compared to the same time last year,” said NAHB Chief Economist Robert Dietz. “Builders will need to watch local home prices relative to incomes, given recent gains in building materials and other construction costs.”

Regionally, on a year-to-date basis, new home sales rose in all four regions, up 7.5% in the Northeast, 10.6% in the Midwest, 9.1% in the South, and 0.5% in the West. 

The NAHB said the significant increases are due in part to lower sales volume during the Covid crisis a year ago.

The full Monthly New Residential Sales report for July 2021 is available here.