The slump in new home sales continued last month, dropping 12.6% to 511,000 annualized, following a 7.1% drop in June, the Commerce Department reported on Tuesday.
With July’s decline, new home sales for the year are off by nearly 40% compared to last year. The decline brought the sales number to the lowest level since 2016 as steep mortgage rates and economic uncertainties around inflation pulled down demand.
With the Federal Reserve striking a more hawkish tone in recent weeks, sales of new homes will most likely have more room to fall this year.
At July’s sales pace, there was enough inventory for about 10.9 months of supply, the highest since 2009, near the end of the Great Recession.
Median prices rose by 5.9% on the month, mostly because prices often peak in July. Taking out that seasonal factor, the year-over-year price growth fell to 8.2% from 10.7% in June, short of the long-term average of 4.5% in the 2010-2019 period.
Beneath the top line, sales dropped in the Midwest to 54,000 from 68,000 previously; in the South to 324,000 from 389,000 previously; and in the West to 98,000 from 113,000 previously. Sales increased slightly in the Northeast, to 17,000 from 15,000 in June.