July 26, 2017 – New single-family home sales represent the number of brand new houses that were purchased or committed to being purchased over the course of a month. This indicator has a trickle-down effect as demand rises for durable goods and consumer spending increases, boosting GDP. It is also a sign of strength in the consumer balance sheet to make the investment.
New home sales grew 0.8% in June to a 610,000 annualized rate, above May after a downward revision to 605,000. This was below the consensus of 611,000. The median price dropped 4.2% to $310,800. Year-over-year prices are down as well, down 3.4% while sales had an 9.1% gain. Sales in the West and Midwest were particularly strong with double digit gains, but the South declined and Northeast was unchanged. The months’ supply of new homes grew slightly to 5.4 months from 5.3 in the previous month.
New home sales did not drop like existing home sales for June but would have been unchanged if May’s data was not revised. The 3-month average home sales this quarter are below quarter 1 which is a negative for GDP. The West was a pillar for growth in this report (+12.5%) which is a large portion of the new home market. Mortgage rates are still very low historically, and we expect the modest upward new home sales trend to continue in the future. According to the Bureau of the Census, millennials make up a quarter of the population and are starting to hit the home buying age. The percent of first-time home buyers in new home sales has been modestly increasing since the beginning of 2014.