US New Home Sales Plummet, Inventory Surges, and Prices Give Back Some Gains

US housing is all of a sudden cooling very quickly. US Census data shows single-family home sales fell for a third consecutive month in June. The decline in sales helped to push new housing inventory to pre-pandemic levels. Prices are still elevated, but they did give back a significant amount of gains last month.

US New Home Sales Fell For A Third Month

US new single-family home sales fell for a third consecutive month, as housing cools. There were 676,000 new homes sold in June at the seasonally adjusted annual rate (SAAR). This is 6.6% lower than the month before, and a whopping 19.4% lower than last year at this time.  The market hasn’t seen such a low volume of sales since April 2020, when the pandemic first started. A little odd considering how different the economy (and housing!) has been since then.

US New Home Sales

The seasonally adjusted annual rate (SAAR) of US new home sales.

Source: US Census; HUD; Better Dwelling.

US New Housing Inventory Surges To Pre-Pandemic Highs 

Inventory of new homes across the US went from scarce to nearly oversupplied in a few months. There were 6.3 months of supply in June, the highest level seen all pandemic, and on the high end of balanced. If it smashes through 7 months of inventory, it would technically turn into a buyer’s market. That’s when prices are expected to fall, or sellers start giving more concessions.  

US New Housing Sees Median Price Roll Back To March Levels

Speaking of falling prices, new home prices slipped a little lower last month. The median sale price fell to $368,800 in June, down 3.12% from the month before. Prices are still 8.12% higher, but that’s a sharp pullback from May’s all-time high. In just a month, they rolled all the way back to the lowest level since March. 

US Median New Home Prices

The median price of a new home sold in the United States.

Source: US Census; HUD; Better Dwelling.

The US new home market is starting to look a little healthier with rising levels of inventory. Prices are still fetching a very large premium compared to just a year ago. If falling sales and higher inventory continue, it’s not hard to see a chunk of that premium disappear soon.

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  • LM 3 years ago

    Healthy Real Estates market. Nothing like in Canada, no slavery.

  • LM 3 years ago

    It’s going to be even more inventory in the us as mortgage moratorium ends at the end of July.
    Plenty of new houses, plenty of old once, plenty of land to build. Freedom! No slavery, no monopoly of elite government, free enterprise as much as it can be.
    Affordability of anything increases: gasoline, cars, plane tickets, internet, housing of any kind from 30k up to 100 millions. Education: much easier to get into Law School, Medical school, Ivy business, and so on.

  • Jim 3 years ago

    That’s not a bubble. This is a bubble, eh.

    **gestures to look around Canada*

  • Ex 3 years ago

    Major Crash Factors for the US Housing Market in 2021:

    buyer fatigue builds to a truly precipitous point where any event could start the slide
    construction picks up quickly
    oil and energy prices soar too high causing crash fears
    speculators believe its time to fully back out of the housing market
    rising tax hikes begin to hit middle income earners
    home prices ridiculously high and hit a point where they are completely unsustainable
    government takes radical move to “correct the situation” for demanding homebuyers
    China/US conflict sends stock markets crashing (invasion/war maneuvers)
    Russia steps up careless behavior toward the accusatory Biden regime
    economy goes into high speed wobble inviting drastic government intervention for debt issues
    big rise in tax on corporations and billionaires causes wealth to flee the country
    stock market at peak volatility and earnings outlooks dive (investors tuned to earnings now only)
    bankers quickly anticipate trouble and begin tightening mortgage lending with higher rates
    end of moratorium leads many homeowners, landlords, cities, and renters into desperate bankruptcy situation
    the Fed has to raise interest rates too quickly in 2022 to cover debt/capital needs, and given the size of home loans, a 1% increase would create defaults and panic selling
    countries around the world plunge into bankruptcy while their economies stall
    debt in the cities most likely to crash hits a critical point
    Republicans gain new power in 2022 elections and begin shutting down the Democrats
    Republicans block excessive spending (their belief that it’s frivolous and wasteful)
    a return to globalism which would wipe the US dramatic gains of the last 3 years
    “America First” dream fades accompanied by dramatic drop in purchases of China products (trade war) and high cost business environment for US companies
    single-family housing construction permits decline spooking home sellers
    homeowners who have hung on forever to sell, begin to find somewhere else to live and begin selling en masse
    massive student loan and personal debt defaults
    Trump investment tax breaks end with nothing to follow them
    yield curve inverts again thus scaring the financial community

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