New Home Sales Surge in June as Prices Fall

The price of a new single-family dropped to its lowest level in seven months in June as sales surged to a five-year high, the Census Bureau and HUD reported Wednesday.

The seasonally adjusted annual rate of sales welled 8.3 percent in June to 497,000. Economists surveyed by Bloomberg expected June sales to increase to 484,000 from May’s originally reported 476,000. May sales were revised down to 459,000.

The median price of a new home, according to the Census/HUD report, fell 5.0 percent in June to $249,700, the third time the median price has dropped in the last four months. May’s median price was revised down to $262,800 from the originally reported $263,900.

While the inventory of new homes for sale rose to 161,000 in June—the highest level since September 2011—from 159,000 in May, the months’ supply fell to 3.9 from 4.2 in May, matching January for the lowest supply since October 2004.

The Census/HUD homes sales report continued to show a decided shift to lower-priced homes; 33 percent of homes sold in June were priced less than $200,000, up slightly from 26 percent in May and 24 percent in April. At the other end of the range, 15 percent of home sold in June were priced at $400,000 or higher compared to 16 percent in May and 24 percent in April.

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By: Mark Lieberman, Five Star Institute Economist