Sales of New Homes Surge in June, Inventories of Unsold Homes are Sliding Down
Sales of new single-family homes rose 11.0% to an annual rate of 384,000 in June, after gains in both April and May. In June, sales of new single-family homes rose in the Northeast (+29.2%), Midwest (+43.1%) and West (+22.6%) but dropped 5.3% in the South. The bottom of the housing market appears to have occurred in January 2009 (329,000). Sales of new single-family homes have dropped 72% from the peak registered four years ago in July 2005. On a year-to-year basis, sales of new single-family homes fell 20% in June, a noteworthy deceleration following the largest cyclical drop in January 2009 (45.5%).
The inventory-sales (I-S) ratio of new single-family homes has dropped significantly. This ratio has dropped in four of the five months ended June. The median I-S ratio is roughly a 6-month supply. The I-S ratio of all new homes was an 8.8-month supply in June, down from a 12.4-month supply in January. Unsold and sold homes are reported as three sub-categories – not started, under construction, and completed homes. Within the sub-category of unsold/sold completed homes, the I-S ratio was an 8.0-month supply in June vs. a peak of a 12.8-month supply in January.
The median number of months to sell a new single-family home continues to advance, and in June it reached a new record high of an 11.8-month supply.
The median price of a new single-family home was $206,200 in June, down 11.9% from a year ago. The elevated level of inventories continues to influence prices of new single-family homes.
In sum, the housing market is stabilizing with sales of both new and existing single-family homes having advanced in each of the three months ended June and the I-S ratios of new and existing unsold homes have peaked.
