The Census Bureau reported sales of new single-family homes at a seasonally adjusted annual rate of 635,000 in July. That’s up 4.3 percent from July of last year, but down 12.8 percent below the sharply revised June numbers. The median price of a new home contracted in July was $312,800 while the average price of a new home contracted was $388,000, both lower than prices last year. The median new home price for July was $14,700 (about 4.5%) less than July of last year. The supply of new homes stood at 6.4 months in July, up from 6.2 months last year.
The revised June estimate for new home sales puts that figure at a new cycle high. The problem for the new home market is what it took to achieve that print. Mortgage interest rates are 3/4 of a point lower than at this time last year. New home sales should be flying off the shelves with rates so low and an economy that is advertised as firing on all cylinders. That’s not what is actually happening.
It is no surprise that plunging mortgage interest rates provided some lift to new home sales this summer. What is interesting is that we may be looking at a rather short-lived bump in the sales figures as the weakening global economy puts additional strain on the housing market. More economic uncertainty and high home prices in general are still proving to be challenges for the real estate market. For the time being, new home sales are doing okay, but nothing to write home about.
Dallas-Fort Worth, still one of the largest new home markets in the country, posted numbers in July that were worth writing about. Updated figures for new construction sales in DFW (actual closings, vs the Census contract estimates) show to be up 20 percent for July. Pending sales of new construction in DFW show to be up 18 percent in July. Flat pricing in the Dallas-Fort Worth area and the big drop in rates have definitely helped area home builders move some inventory this summer.