New Home Sales Plunge To Lowest Since April 2020 Lockdown Trough

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PETALUMA, CALIFORNIA - MARCH 23: Homes under construction are seen at a housing development on March 23, 2022 in Petaluma, California. According to a report by the Commerce Department, sales of new single-family homes slowed in February as mortgage rates inch up and and house prices continue to rise. (Photo by Justin Sullivan/Getty Images)

The Commerce Department data Tuesday showed that sales of new homes in the U.S. fell 8.1 percent to an annual rate of 590,000. This was a slower pace than economists expected.

Commerce Department has revised its estimates for previous months. The Commerce Department revised its May sales estimate from 696,000 down to 642,000. This indicates that the market is already slower than expected. This means that sales increased by 6.3 percent, compared to the initial 10.7 percent estimate.

The new home sales data is often volatile, especially as interest rates change. They are often updated.

Econoday reports that economists expected a June sales rate of 676,000.

This June figure is 17.4 percent lower than a year ago.

Media sales prices for a new home were $402,400. This is a decrease from April’s record-breaking $449,000 and May’s record $457,000. The decline in median sales prices over the past three months may have been due to new home prices peaking this spring, just as the Federal Reserve started raising interest rates.

In June, the supply of new homes increased by 10.7 percent compared to the previous month. The current sales rate is 9.3 months, which is an excessive amount of unsold homes.

The Federal Reserve has cooled what was once a hot housing market. This is the main channel through which tightening monetary policy by the Fed works. In June, the average fixed-rate 30-year mortgage rate was 5.52 percent. It was around 5.45 percent in July. The average rate was 2.87 % a year ago.

Separately, Tuesday’s S&P CoreLogic CaseShiller 20-city index showed that home prices rose in May by 20.5 percent in comparison to a year ago. This is a decrease from the April 21.12 percent increase. The index increased 1.3 percent in May compared to April’s 1.7 percent gain.

The Federal Housing Finance Agency released Tuesday’s report on home prices. It showed a 1.4% month-over-month increase and an 18.31% annual gain.