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Economy in Brief

U.S. New Home Sales Plunge as Prices Rise in July
by Tom Moeller  August 23, 2022

• Home sales fall to lowest level since January 2016.

• Sales decline in most of country.

• Median sales price increase reverses June decline.

Rising mortgage rates continue to take their toll on the housing market. New single-family home sales during July declined 12.6% (-29.6% y/y) to 511,000 (AR) after falling to 585,000 during June, revised from 590,000. It was the lowest sales level since January 2016. The Action Economics Forecast Survey expected 574,000 sales in June.

Fewer sales in the Midwest led last month's weakness with a 20.6% decline (-22.9% y/y) to 54,000 units as it reversed most of the June increase. Sales have fallen 59.1% since the June 2020 peak. Sales in the West weakened 13.3% last month (-50.3% y/y) to 98,000, off 59.5% since December. Sales in the South declined 12.1% (-20.8% y/y) to 342,000 after holding steady in June and rising moderately in May. Offsetting these declines, sales in the Northeast rose 13.3% in July (-37.0% y/y) to 17,000 following three straight months of sharp decline.

Despite lower sales last month, the median price of a new home rose 5.9% (+8.2% y/y) to $439,400 following a 5.9% June decline. The average sales price of a new home improved 19.6% (18.3% y/y) to $546,800 following an 11.2% June decline. These sales price data are not seasonally adjusted.

Sales weakness prompted a 3.1% increase (28.2% y/y) in the number of unsold new homes to a seasonally adjusted 464,000, up from a low of 142,000 in July 2012. The seasonally adjusted months' supply of new homes for sale jumped to a near-record 10.9 months in July from 9.2 in June. It remained up from a record low of 3.3 months in August 2020. The median number of months a new home stayed on the market fell to a record low of 2.3 months. These figures date back to January 1975.

New home sales activity and prices are available in Haver's USECON database. The consensus expectation figure from Action Economics is available in the AS1REPNA database.

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