Contracts for new, single-family home sales in the US increased in June by +7% to a 646,000 seasonally adjusted annual rate according to estimates from the joint release of HUD and the Census Bureau Thursday. The increase came off a downwardly revised May estimate, which was decreased from an initial reading of 626,000 to a new estimate of 604,000. Year-over-year, the June estimate is +4.5% higher compared to June 2018.
The June estimate is another reminder that builders must manage costs as affordability concerns rise. While a solid economy and positive demographics support future demand for housing, it is critical to address the mounting affordability crisis despite lower mortgage rates.
Inventory increased 9.4% from a year ago to a level of 338,000 single-family homes for sale in June. The current months’ supply stands at a near normal level of 6.3. This marks a somewhat elevated level of inventory, suggesting ongoing soft conditions for home construction in the near-term. However, sales increased in the not started construction category (205,000 units), suggesting construction growth ahead.
Median new home sales price in the US increased +2.3% in June to US$310,400 compared to May but essentially unchanged from a year ago (US$310,500). Despite the lower mortgage rates in the recent weeks, the new home sales pace is weak as a result of housing affordability concerns.