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First Cut: Single-family home sales volatile month-to-month, but underlying trend is good

Sales of new single-family homes fell 12.8% in July to 635,000, down from 728,000 in June which was a spike higher after 602,000 in May. Sales have been bouncing up and down in recent months, first as consumers reentered the housing market when mortgage interest rates fell, then fell as some pent-up demand was exhausted, but have gained and slipped in succession as another decline in rates drew in a fresh wave of buyers. The underlying trend, however, seems to be one in which sales of new homes have revived compared to the second half of 2018. Sales of new homes were up 4.3% compared to the year-ago month. Consumers are turning to new construction while supplies of existing homes are limited in the more sought-after segments of the housing market. Builders have responded with smaller, more affordable units to meet that demand.

The supply of homes on the market rose to 6.4 months in July from 5.5 in June when large numbers of purchases reduce the stock.

The median price of a single-family home was up 2.2% in July from June to $312,800, although year-over-year the price was down 4.5%. Some of this is due to increased sales of homes in the middle-price range compared to larger, more expensive units.

There was also a greater share of units being sold in July that are not yet started (199,000) and under construction (221,000) compared to those completed (215,000). This was about 66% of the total 635,000 sales in June compared to 62% of the 728,000 in June.


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