In June, new single-family home sales dropped below the rate in May, but remain strong on a year-over-year basis, according to HUD and the U.S. Census Bureau's joint release of their June New Residential Sales data on Friday.
The data determined that new single-family home sales in June 2015 were at a seasonally adjusted annual rate of 482,000, 6.8 percent below the revised May rate of 517,000 and is 18.1 percent above the June 2014 estimate of 408,000.
Trulia's Chief Economist Selma Hepp mentioned in a statement that today's sales numbers, although volatile, still show annual strength.
"Compared to the sales for existing homes, new home sales have been lagging since the start of the recovery," Hepp said. "But through June of this year, new home sales rose to 274,000, not seasonally adjusted, which is a 21.2 percent increase from the same first half of 2014. Year-over-year sales are also up 18.1 percent. Despite the monthly slowdown, annual increases are very encouraging even though we are starting from a relatively low base – lower than during previous recessions."
According to HUD and the Bureau, the median sales price of new houses sold in June 2015 was $281,800 and the average sales price was $328,700. The seasonally adjusted estimate of new houses for sale at the end of June was 215,000. This represents a supply of 5.4 months at the current sales rate.
"As a sign that builders are now shifting to release more affordable units on the market, the median sales price for new homes is below the recent peak in 2014," Hepp noted. "In fact, about 4 percent of the newly-built homes sold were under $150,000 in June, which is down from 7 percent last month, but there was a strong jump in the share of homes sold at $200,000-$300,000–jumping 10 percentage points from 30 percent to 40 percent of all sales. While the share of affordable homes this is markedly down from the early 2000s, the share continues to slowly increase."
Hepp says that new home sales are stronger in the West and South, where job growth is booming.
"Overall, it’s encouraging to see more homes being sold in the lower-price segments indicating that builders may be increasingly accommodating first-time buyers and affordability-constrained buyers," Hepp concluded. "The new home market will continue improving due to several important tailwinds – robust job growth, pent-up demand driven by both demographics and economic recovery, and simply extremely low levels of construction following the housing collapse."
Robert Denk, assistant VP for Forecasting and Analysis at the National Association of Home Builders (NAHB) noted in a blog that although June sales were soft, these numbers have been upwardly rising since 2012.
"We expect this to continue through the rest of the year and into 2016," Denk said. "Strong job gains are bolstering housing demand. Rising builder confidence, housing starts and new home sales all point to continuing recovery in the housing sector."
Denk added, "Headwinds on both the builder and buyer sides remain. Low supplies of developed lots to build on and skilled labor for construction are holding back builder efforts to meet rising demand. Meanwhile still restrictive access to mortgage credit is impeding more activity on the buyer side. Some recent improvement has been made on the lending side and continuing improvement in the housing sector should lure back the workforce that fled during the housing downturn. But the road to a more robust housing market, and the infrastructure that supports it, won’t be without its bumps. No magic wand, just an invisible hand, as market forces continue to push the housing recovery forward."