The Census Bureau reported Friday that sales of newly constructed homes fell to a 394,000 seasonally adjusted annual rate in July from 455,000 in June. Sales from the previous three months were revised downward, including a 42,000 downward revision in the June sales rate.
This shocker of a report which tracks purchase contracts (not actual closings or sales) probably reflects cancelations due to rising mortgage rates.
Most of the reported decline in sales involved new homes priced in the $150,000 to $300,000 range. The move-in rates could have prompted some of those first-time and move-up buyers to walk away, according to Wells Fargo Securities senior economist Mark Vitner.
But he noted that builders have huge backlogs of orders for new homes. And extremely wet weather in some sections of the country has slowed construction and the completion of new homes.
“It may be the combination of low inventory and rainy weather has led to fewer sales in July,” Vitner told NMN. “I can’t believe that rates at current levels would be a killer for the housing market.”