Economic Snapshot: New home sales climb, existing sales drop

New home sales are now at their highest rate since October 2007. Existing home sales, however, are struggling with a lack of available inventory.

New home sales

Sales of new single-family houses were at a seasonally adjusted annual rate of 654,000 in July 2016. This is 12.4 percent above the revised June rate of 582,000 and 31.3 percent above the July 2015 estimate of 498,000.

The median sales price of new houses sold in July 2016 was $294,600 and the average sales price was $355,800. The seasonally adjusted estimate of new houses for sale at the end of July was 233,000, which represents a supply of 4.3 months at the current sales rate.

Existing home sales

Total existing home sales dropped 3.2 percent to a seasonally adjusted annual rate of 5.39 million in July. Sales are now 1.6 percent below July 2015; this is the first year-over-year decrease since November 2015 and marks only the second time in 21 months that YOY sales were below the previous year.

The National Association of Realters says the decrease is due to frustratingly low inventory levels in many parts of the country.

“Severely restrained inventory and the tightening grip it’s putting on affordability is the primary culprit for the considerable sales slump throughout much of the country last month,” said Lawrence Yun, NAR chief economist. “Realtors are reporting diminished buyer traffic because of the scarce number of affordable homes on the market, and the lack of supply is stifling the efforts of many prospective buyers attempting to purchase while mortgage rates hover at historical lows.”

Total housing inventory at the end of July increased 0.9 percent to 2.13 million existing homes available for sale; this is still 5.8 percent below July 2015 and has now declined for 14 consecutive months. Unsold inventory is at a supply of 4.7 months at the current sales pace, up from 4.5 months in June.

The median existing home prices for all housing types was $244,1000 in July up 5.3 percent from the previous year. July’s price increase marks the 53rd consecutive month of YOY gains.

The share of first-time buyers was 32 percent in July, below the 33 percent in June but up from 28 percent in the previous year. First-time buyers represented 30 percent of all sales in 2015.

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