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Sales of newly built homes plummeted between May and June, according to data released Tuesday, as the housing market continues to shift in the face of sky-high prices and mortgage rates.
Sales of new homes in June were at a seasonally adjusted rate of 590,000, according to the U.S. Census Bureau, 8 percent below the May rate of 642,000, and 17.4 percent lower than in June 2021.
“June’s new home sales data reflects the impact of another month of high mortgage rates and rising inflation,” Hannah Jones, an economic data analyst at Realtor.com said in a statement. “The double-whammy of rising borrowing costs and still climbing listing prices is making it harder for buyers to find a suitable home in their price range. As a result, many home shoppers have decided to suspend buying plans altogether in recent months, which has allowed for housing inventory to recover from last year’s declines.”
Sales in May saw an unexpected jump after falling for four straight months, only to dip again in June.
The median sale price for new homes sat at $402,000 in June, an increase of $11,500 from a median price in June 2021 when they sat at $390,500, according to census data.
June’s numbers represent the lowest new home sales numbers since the heart of the pandemic in April 2020 when they sat at a seasonally adjusted rate of 623,000. Sales have fallen since hitting a peak of 1.04 million in August 2020.
The seasonally adjusted estimate of new houses for sale at the end of June was at 367,000, representing a supply of 6.2 months at the current sales rate, a decrease from May when the seasonally adjusted estimate sat at 444,000 representing a supply of 7.7 months.
Homebuilders have reacted to the shifting economy by pulling back from new housing construction, with new housing starts, permits, and completions all ticking down in June. Homebuilder sentiment has nosedived, seeing the sharpest month-over-month decline on record between May and June as homebuilders contest with demand stifled by high rates and sky-high construction costs eating into their bottom line.
“While the increase in for-sale homes offers a breath of fresh air to buyers who remain in the market, builders have responded to cooling demand by slowing the pace of new home construction,” said Jones. “The recent decline in buyers has been taken as a signal to slow new home construction for the time being, as builders, buyers, and sellers alike see how the market settles in the new financial environment.”