New-home sales fall to nine-month low while supply rises

Register now

Purchases of new homes unexpectedly dipped to the weakest pace in nine months as higher prices and mortgage rates sideline demand, adding to signs of a cooling in the housing market, government data showed Thursday.

Single-family home sales fell 1.7% month-over-month to a 627,000 annualized pace (the estimate was 645,000) after a 638,000 rate (revised from 631,000). The median sales price increased 1.8% year-over-year to $328,700. The supply of homes at the current sales rate rose to 5.9 months from 5.7 months; 309,000 homes for sale was the highest since 2009.

The first back-to-back decline since January was led by a 52.3% drop in the Northeast to 21,000 home sales, the fewest since 2015, as well as a 3.3% decline to 355,000 in the South, the biggest region. The West and Midwest recorded gains.

The figures follow data Wednesday showing sales of previously owned homes fell for a fourth month to the lowest since early 2016. A separate report on Thursday showed home prices rose 1.1% in the second quarter from the previous three months, the smallest gain in four years, according to the Federal Housing Finance Agency.

At the same time, a robust job market and higher take-home pay following tax cuts should keep demand for new homes stable. The number of properties sold but not yet under construction rose to 212,000, the highest since November, a sign builders will stay busy in coming months. In addition, 65,000 homes were for sale but not yet started, the most since 2008.

New-home sales, tabulated when contracts get signed, account for about 10% of the market. While volatile, they're considered a timelier barometer than purchases of previously owned homes, which are calculated when contracts close and are reported by the National Association of Realtors.

The Commerce Department said there was 90% confidence that the change in sales last month ranged from a 16.4% drop to a 13% increase, underscoring the volatility of the data. The report is released jointly by the Census Bureau and Department of Housing and Urban Development in Washington.

Bloomberg News
Purchase Housing market Homebuilders Mortgage rates HUD