Sales of new homes rose to an annualized rate of 901,000 in July – a near 13.5 year high for the second month in a row, according to the Census Bureau and the Department of Housing and Urban Development.
According to the Census data, single-family homes sold at a gain of 13.9%, slightly down from the upwardly revised June rate of 14%. However, new home sales for July were 36.3% above the July 2019 estimate of 661,000 and the highest reported since December 2006.
“The July housing starts report and the recent surge in the National Association of Home Builders Housing Market Index had previously indicated that new sales would likely surpass our August forecast, in which we had predicted some cooling off in sales over the third quarter. However, today’s report exceeded even those upwardly revised expectations,” said Doug Duncan, Fannie Mae’s chief economist.
The median sales price of new homes was $330,600, while the average sale price was $391,300, according to census data.
Despite the West market recently experiencing the greatest gain in builder confidence in the three-month moving averages, the Midwest experienced the largest increase in sales at 58.8%. The South saw a 13% increase and the West saw a 7.8% gain.
The Northeast posted a loss of 23.1% in sales compared to the month of June, as some data points to an urban exodus from the Northeast market.
“Despite the recent increase in home construction from builders bolstered by strong new home sales figures, sales of new homes will likely be constrained by a shortage of available homes at some point as builders’ race to get ahead of demand,” said Zillow economist Matthew Speakman.
“But for now, the housing market continues to blow past expectations and continue its strong 2020 well into the summer,” Speakman said.
According to Speakman, seasonal factors and uncertainties brought upon by the enduring spread of the coronavirus could also hinder sales volume in the coming months.
The monthly supply number that measures how long it would take to sell off current inventory fell to four months, the lowest in almost seven and half years.