The market for new single-family houses in the U.S. showed even more strength than expected in July as buyers are squeezed out of the existing home market by limited inventory.
Sales of new homes rose 4.4 percent in July compared with the previous month to a seasonally adjusted annual rate of 714,000. That is the fastest rate since February of 2022—before the Federal Reserve began raising interest rates to bring down the high inflation that has plagued the Biden presidency.
Sales were expected to rise to 704,000, according to a survey by Econoday.
Compared with a year ago, when the market was contracting because of fears of an economic downturn and the shock of aggressive Fed hikes pushing up rates on home loans, new home sales are up 31.5 percent.
The median price of a new home was up 4.6 percent to $436,700 from $416,700 in June. The average sales price was $513,000.
Sales of new single-family houses in the U.S. rose in July, beating economists’ forecasts, according to data from the Commerce Department released Wednesday. Here are the main takeaways:
The seasonally adjusted estimate of new houses for sale at the end of July was 437,000. This represents a supply of 7.3 months at the current sales rate, down from 7.5 months in June.
The housing market has been weighed down by rising mortgage rates over the past year and a half. Many real estate professionals say the housing market was in recession last year.
The market for new homes, however, has been supported by the limited supply of existing homes for sale. Many homeowners are deciding not to sell their homes currently financed with low interest mortgages because their next home would need to be financed at a much higher rates. Some real estate professionals are referring to these legacy home loans as “golden handcuff” mortgages.
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