New-home sales in the US fell in June and May’s reading was revised significantly lower, the Commerce Department said Thursday. Sales of new single-family homes fell 8.1 per cent from May to a seasonally adjusted annual rate of 406,000,
Meanwhile, May sales were revised down to a rate of 442,000 from a previously estimated 504,000. The initial May reading would have been the strongest pace since the recovery began, but the revised figure isn’t even the best of the year.
Meanwhile existing home sales bumped up again in June as inventory levels eased, data released by the National Association of Realtors Tuesday shows.
Sales of existing, or previously owned, homes last month rose 2.6 per cent to an annualized, seasonally adjusted pace of 5.04 million, the highest pace since October 2013, when the pace was 5.13 million. However, June’s sales pace is still 2.3 per cent below the 5.16 million level one year ago.
Home Sales, US
The median existing-home price for all housing types in June was US$223,300, 4.3 per cent higher than one year earlier. Home prices have now been increasing on a year-over-year basis for 28 consecutive months. Distressed homes in June were 11 per cent of sales, down from 15 per cent one year earlier. Foreclosures sold for an average discount of 20 per cent in June, short sales 11 per cent.
Sales of newly built homes account for about 10 per cent of US home-buying activity. From a year earlier, new-home sales were down 11.5 per cent in June.
The supply of homes on the market is increasing. There was a 5.8-month supply of new homes on the market at the end of last month, up from a 5.2-month inventory at the end of April.
Inventory levels are improving. Total housing inventory rose 2.2 per cent to 2.3 million existing homes available for sale at the end of June, which represents about a 5.5-month supply at the current sales pace.
US Census Bureau Quarterly Sales by Price and Financing data indicates that count of cash-based new home sales rose to 10,000 for 2Q, matching a cycle high, explained the National Association of Realtors Friday. During the 2002-2003 period, cash sales made up only 4 per cent of purchases. In contrast, cash purchases constitute a considerably larger share of the existing home market – 32 per cent of sales in June 2014 for example.
Another measure of cash sales for total new construction, from CoreLogic, shows a higher level of cash sales than the Census: 17 per cent in April 2014.
New home sales due to FHA-backed loans fell to 11 per cent of the market during 2Q. This is down from 28 per cent in 1Q 2010 and is closer to the 10 per cent average in 2002-2003. As the conventional mortgage financing share has risen, the share of new single-family home sales due to FHA-backed mortgages has declined, says the NAR.
These sources of financing serve distinct market segments, which is revealed in part by the median new home price allocable to each. For the second quarter, the median new home price due to FHA financing was $212,500. The median price for VA-backed loans rose to $274,800.