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Economy in Brief

U.S. New Home Sales Soar in July
by Sandy Batten  August 25, 2020

• New single-family home sales increased 13.9% m/m in July, up 58% from their April low and well above expectations.

• Sales fell in the Northeast but rose in the other three regions, notably in the Midwest.

• Prices were mixed.

Sales of new single-family homes increased 13.9% m/m (36.3% y/y) to 901,000 in July, the highest pace of sales since December 2006. This followed an upwardly revised 15.1% m/m jump to 791.000 in June (initially 776,000). The Action Economics Forecast Survey expected sales of 788,000 in June. Sales have risen 58% from their April low.

The rise in home sales is occurring against a backdrop of declining interest rates on fixed-rate mortgages to more than 45-year lows. The rate on a 30-year fixed-rate mortgage fell to an average 3.02% in July from 3.16% in June and 3.47% in February before the lockdowns.

After having jumped 73.3% m/m in June, sales in the Northeast retreated in July, falling 23.1% m/m (+25.0% y/y) to 40,000 in July. Sales in the other three major regions increased in July, led by the Midwest where sales jumped up 58.8% m/m (81.4% y/y) to 127,000 following a modest 6.7% m/m rise in June. Sales in the South gained 13.0% m/m (27.6% y/y) to 513,000 in July while sales in the West strengthened 7.8% m/m (40.8% y/y) to 221,000 after double digit monthly increases in both May and June.

The median price of a new home slipped 1.9% m/m (+7.2% y/y) to $330,600 in July. In contrast, the average price of a new home rose 2.5% m/m (4.8% y/y) to $391,300 in July. Home prices, which are not seasonally adjusted, have been range-bound for the past few years.

The months' supply of new homes on the market declined sharply again in July to 4.0 months from 4.6 in June, 5.4 in May and 6.8 in April (the most recent high). The median number of months a new home stayed on the market edged down to 4.1 months in July from an upwardly revised 4.2 months in June.

New home sales activity and prices are available in Haver's USECON database, while MBA loan applications can be found in SURVEYW. The consensus expectation figure from Action Economics is available in the AS1REPNA database.

U.S. New Single-Family Home Sales (SAAR, 000s) Jul Jun May Jul Y/Y % 2019 2018 2017
Total 901 791 687 36.3 685 614 616
  Northeast 40 52 30 25.0 30 32 40
  Midwest 127 80 75 81.4 72 75 72
  South 513 454 406 27.6 400 347 341
  West 221 205 176 40.8 183 160 164
Median Price (NSA, $) 330,600 337,000 312,900 7.2 319,267 323,125 321,633
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