June sales of new single-family homes in June came in at 776,000—a 13.8% increase from May, according to data from the U.S. Census Bureau and the Department of Housing and Urban Development.
This is also a 13.7% increase from June 2019’s estimate of 726,000.
“New home sales keep roaring along, spurred by pent-up demand. Not enough existing homes are up for sale, so shoppers are buying new homes,” said Holden Lewis, Home and Mortgage Specialist, NerdWallet.
The median sales price for new homes in June was $329,000 and the average sales price was $384,700.
The U.S. Census Bureau revealed June had an estimated 4.7 months’ supply of homes.
Every region of the nation posted increases in new-home sales, with the largest monthly gain coming in the northeast at 89.7%. The northeast also had the highest annual rise at 111.5%.
The National Association of Homebuilders (NAHB) said the estimated new home sales of 776,000 is the strongest annual gain since the Great Recession.
April’s 571,000 pace of growth is the low point of sales in the current recession. The April rate was 26% lower than the prior peak, pre-recession rate set in January.
The NAHB states that sales are consistent with its recent Home Market Index, which returned to pre-recession highs and says “housing will be a leading sector in an emergency recovery.”
First American’s Deputy Chief Economist, Odeta Kushi, said on Twitter, “Demographic demand, a (very) low rate environment against limited supply of existing inventory=demand for new homes.”
Demographic demand, a (very) low rate environment against limited supply of existing inventory= demand for new homes. https://t.co/9klNJmdgJ3
— Odeta Kushi (@odetakushi) July 24, 2020
Rates continue to be at record lows, despite Freddie Mac reporting the first rise in several weeks, with the average rate of a 30-year fixed-rate mortgage averaging 3.01%.
“While housing demand continues to rebound, the month-long swoon in economic activity has caused the 10-year Treasury benchmark to drop. In the short-term, this means the demand will continue on the back of near record low mortgage rates,” said Sam Khater, Freddie Mac’s Chief Economist. “However, the most recent consumer spending data has been pointing to slow growth since mid-June. The concern is that the pause in economic activity will cause unemployment to remain elevated which will lead to longer-term labor market distress.”
Mortgage rates briefly fell below 3%, with Freddie Mac reporting on July 16 the average rate for a 30-year fixed-rate mortgage fell to 2.98%.