Housing

Rising Prices Stymie New Home Sales

New home
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The U.S. Census Bureau this morning released data on new single-family home sales for July. Sales dropped 13.4% month-over-month to a seasonally adjusted annual rate of 394,000, from a downwardly revised June sales figure of 455,000. Economists had expected a seasonally adjusted annual rate of 487,000. The July rate is 6.8% above the rate for July 2012. At the peak in 2005, new home sales posted a seasonally adjusted annual rate of nearly 1.4 million.

The Census Bureau also reported that the median sales price for new homes sold in July was $257,200, about 3% above the June median, and the average sales price was $322,700, up about 9.3% from June. The median sales price for a new house in June was $249,700 and the average sales price was $295,000.

At the end of July, the number of new homes for sale totaled 171,000, a supply of 5.2 months, up from a supply of 3.9 months at the end of June.

Higher median prices and sharply higher average prices likely had a lot to do with the drop in new home sales in July. Coupled with higher mortgage interest rates, the incentives for buyers have begun to fade away. House prices are still well below their peak in 2005 to 2006 and interest rates remain below 5%. The perception among buyers, however, may be that houses are getting too expensive again.

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