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New Home Sales Break Streak

New Home Sales Break Streak

Michael Jensen, Mortgage and Finance Guru
, Mortgage and Finance Guru

In our effort to cover important trends that affect the mortgage market, FREEandCLEAR keeps a close eye on new home sales, which is the number of newly constructed housing units that are sold in a month.  The new home sales figure is reported separately from the existing home sales figure, which is the number of previously constructed homes that are sold in a month.  The new home sales market is smaller than the existing home sales market but it is still an important indicator for the real estate and mortgage markets.  In addition to reporting the number of housing units sold, the new home sales report also includes information on the supply of units for sale as wells as the median new home sales price.  The new home sales report, issued on a monthly basis, includes statistics for the prior month.

In an outlier compared to other strong housing and mortgage market indicators, the new home sales report for July fell significantly below expectations.  June new home sales broke a two month winning streak with sales decreasing 6.8% to 482,000 annualized units as compared to a 2.2% increase in May.  The June new home sales figure came in over 50,000 annualized units below industry analyst expectations.  Although home sales declined there were several positive developments for buyers in the report.  First, the median new home sales price stayed relatively flat in June at $281,800, up 0.5% on a monthly basis but down 1.8% on a year-over-year basis.  New home inventory also expanded with the number of new homes available for sale up 3.4% on a monthly basis to 215,000 units.  The increase in inventory coupled with the drop in sales caused supply as compared to monthly sales to jump to 5.4 months as compared to 4.8 months in May.  New home sales declined in three out of four regions with the Northeast being the sole region in positive territory.  After mostly positive reports for 2015, the July new homes sales report showed that home buyer behavior fluctuates from month-to-month.  (Source: Bloomberg)

What it Means for Mortgage Borrowers

Stable new home sales prices and increased housing supply are both positives for prospective home buyers and compare favorably to the existing home sales market which saw a record-setting median home sales price and decreased inventory in June.  After a strong first half of the year, it is not overly surprising or concerning to see the new home market pull back for a month. At least for the month of June, buyers showed a much stronger preference for existing homes and it will be interesting to see if the trend continues when the July figures are released.  If you are a prospective home buyer weighing a new or existing property be sure to check out our Mortgage Expert Insights about the Differences Between Buying a New and Existing Home.

The FREEandCLEAR Mortgage Expert

www.freeandclear.com

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About the author

Michael Jensen, Mortgage and Finance Guru

Michael is the co-founder of FREEandCLEAR. Michael possesses extensive knowledge about mortgages and finance and has been writing about mortgages for nearly a decade. His work has been featured in leading national and industry publications. More about Michael

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