New Home Sales Fall to a Seven-Month Low in June

New home sales fell to the lowest level since November 2023, as elevated mortgage rates continued to keep buyers on hold.

Sales of newly built, single-family homes in June fell 0.6% to a 617,000 seasonally adjusted annual rate from a slight upwardly revised reading in May, according to newly released data from the U.S. Department of Housing and Urban Development and the U.S. Census Bureau. The pace of new home sales in June is down 7.4% from a year earlier.

Many potential buyers are remaining in a holding pattern due to elevated mortgage rates that averaged near 7% in June. However, moderating inflation suggests lower interest rates in the months ahead and that should bring more buyers off the sidelines.

New single-family home inventory in June remained elevated at a level of 476,000, up 11.2% compared to a year earlier. This represents a 9.3 months’ supply at the current building pace. However, due to a lack of resale homes for sale, the combined inventory for new and existing single-family homes remains lean at a 4.7 months’ supply, according to NAHB estimates. Total months’ supply was 4.4 in May 2024 and 3.8 in June 2023.

Of the new home inventory, 102,000 are completed ready-to-occupy homes, up 50% year over year. This segment represents 21% of total inventory.

A new home sale occurs when a sales contract is signed, or a deposit is accepted. The home can be in any stage of construction: not yet started, under construction or completed. In addition to adjusting for seasonal effects, the June reading of 617,000 units is the number of homes that would sell if this pace continued for the next 12 months.

The median new home price was $417,300, up 2.5% compared to last month, and remained essentially flat compared to last year.

Regionally, on a year-to-date basis, new home sales are down 5.5% in the Northeast and 6.7% in the South. New home sales are up 25.5% in the Midwest and 5.7% in the West.