In July, the sales volume of new single-family homes in the United States declined, but it performed better than economists’ expectations. Overall, this trend is still consistent with the soft real estate market environment under high mortgage interest rates.
According to the U.S. Census Bureau, the seasonally adjusted annual sales volume of new homes in the U.S. decreased by 0.6% in July to 652,000 units. Despite the decline in sales, these figures were higher than expected, as the median of estimates from economists surveyed by Reuters and Bloomberg was 630,000 units.
The annualized sales volume for June was revised upward from the initially reported 627,000 units to 656,000 units.
New home sales account for over 10% of total housing sales in the United States, calculated by the number of contracts signed. Monthly fluctuations are significant, and data are subject to substantial revisions.
Compared to the same period last year, new home sales in July decreased by 8.2%, further highlighting the ongoing challenges facing the real estate market.
This data aligns with a broader market analysis conducted by the market information platform IndexBox, which points out that high mortgage interest rates are persistently putting pressure on the housing market.
Despite sales exceeding expectations, the new housing market is increasingly relying on price reductions and incentives to attract buyers to compete in a high mortgage interest rate environment. This month, 66% of builders reported using sales incentives, reaching the highest level since the COVID-19 pandemic, as builders are trying to clear completed homes inventory, reaching the highest inventory level since 2009.
Price reductions for new homes are also a driving factor for sales. Government reports show that the median sales price for new homes in July decreased by nearly 6% compared to the same period last year, to $403,800, marking the lowest July price level since 2021. With the exception of one month, home prices have decreased year-over-year every month this year.
The median sales price for new construction homes has been lower than existing home prices for the fourth consecutive month.
However, even with price reductions, builders still need time to clear inventory. The supply of new homes for sale, including those not yet started or under construction, decreased slightly to 499,000 units in July, but remains close to the highest level since 2007.