Sales of new single-family houses in July 2015 were at a seasonally adjusted annual rate of 507,000, according to estimates released jointly today by the U.S. Census Bureau and the Department of Housing and Urban Development.
This is 5.4% (±14.8%) above the revised June rate of 481,000 and is 25.8% (±22.6%) above the July 2014 estimate of 403,000.
“July new home sales data didn’t surprise anyone, but overall we feel great about where the housing market is right now,” said Tom Wind, Executive Vice President of Home Lending for EverBank.
The median sales price of new houses sold in July 2015 was $285,900; the average sales price was $361,600.
The seasonally adjusted estimate of new houses for sale at the end of July was 218,000. This represents a supply of 5.2 months at the current sales rate.
“Today’s housing data releases of New Home Sales and Case-Shiller & FHFA Home Price indices remind us that while the stock market can fluctuate wildly, real estate is slow and steady and has returned to very healthy conditions,” said realtor.com Chief Economist, Jonathan Smoke. “The main holdback to increased sales remains supply, but that’s precisely why home prices are rising consistently at above normal rates.
“The median new home price, $285,900 in July, increased for the first time since February, which is a hint that part of the lack of growth is a result of builders not fully offering more options at affordable price points. For the new home market to completely recover to normal levels, the entry level buyer must be embraced,” Smoke said. "Although the monthly observation of new home sales is not statistically significant, the annual observation is, showing that new home sales are up over last year by over 20%.”
On a monthly and annual basis, the Midwest region fared worst, with no growth since July 2014 and 6.9% drop from June’s reading. The Northeast saw the biggest annualized and monthly gains, up 39.1% from July 2014 and 23.1% from June.
“Volatility is common for new home sales, but as other housing data released last week have shown, the housing recovery is making steady strides forward,” said Trulia Chief Economist Selma Hepp. “The robust improvements in last week’s new housing starts numbers are especially encouraging for new home sales going forward with single-family starts growing at its fastest pace since the recession.
“Inventory of new homes continues to fall, however. Slow new home sales, however, reflect both demand and supply side issues. With builders focused on higher-end construction, many first-time buyers, who typically gravitate towards more affordable homes, are being excluded from the market,” she said. “This is especially apparent in the slower sales in the West where inventory is tight with affordability constraints busting at the seams. In fact, new home sales in the region where at its slowest of the year last month.”
Hepp said that despite the low current inventories, construction growth are promising for better months ahead.
Trulia’s recent report of the hottest homebuilding markets showed that some major metros, such as New York, Boston, and Los Angeles, are experiencing a construction boom and are benefiting from the growth in multi-family rental sector.
“On the other hand, single-family starts are still averaging 20% below historical levels in the top 100 metro areas. Many markets, however, are much lower than that and have a lot of catching up to do,” Hepp said.
“The housing market remains a bright spot in today’s volatile market, because it is driven by longer-term trends such as demographics, stronger job market, improving balance sheets of households and relatively good affordability by historical standards,” said Peter Ciganik, Managing Director at GTIS Partners, a real estate private equity firm in New York. “The strong home sales number is a result of steadily improving economic conditions, sub-4% mortgage rates, FHA premium reductions, and rising consumer confidence. Interestingly, the recovery so far has happened without the first-time home buyer, but first-time buyers are now slowly returning to the market and will provide another organic boost to household formations and new home sales in the coming years.”