New single family residential (SFR) home sales of 631,000 on seasonally adjusted annualized rate (SAAR) were up 2.2 percent versus a year ago but down 5.3 percent sequentially from May. Year-to-date new home sales (not seasonally adjusted) of 345,000 units were up 5.8 percent compared to the same period a year ago.
There were an estimated 301,000 new homes available for sale at the end of June 2018 equating to 5.7 months inventory on a seasonally adjusted basis. In comparison, existing home inventory for the same period was 4.1 months. On an unadjusted basis, June 2018 inventory of unsold new homes was 275,000 in the following state of construction:
18.2 percent not yet started
59.6 percent under construction
22.2 percent completed
New home sales are counted differently than existing home transactions. An existing home sale is tallied when the property actually closes and ownership transfers from the seller to the buyer. New home sales are counted at the time the purchase contract is signed. In some extreme circumstances for a counted new home sale, construction may not have yet commenced and that specific transaction may not close. As a result, new home sales often have material revisions from one month to the next. In June 2018, new homes sold were as follows:
32.1 percent not yet started
35.7 percent under construction
32.1 percent completed
Median new-home price of $302,100 was down 4.1 percent versus the same month a year ago. The average new home price at $363,300 was down 1.8 percent versus a year ago. Declining prices are a result of builders’ increased construction of entry-level homes (rather than the higher-priced move-up market) and rising interest rates.
The following graph shows new home sales on a SAAR and monthly median prices since January 2007.
Commencing 2001, the median new home price has averaged 22.9 percent greater than the median existing home price. From 2001 through 2006, new home prices were typically 10.9 percent greater than the corresponding existing home price. Since 2014, new home median prices have averaged 31.2 percent greater than existing homes. New home median price was just 21.1 percent, 18.1 percent and 9.1 percent greater than existing home prices for April, May and June 2018, respective.
New home sales volatility is not systematic across the U.S. The U.S. Census Bureau reports these data on a national and regional basis, delineated as follows:
The next table shows year-over-year changes for the U.S. and the four major geographic regions comparing June 2018 to June 2017. As usual, I invoke the TINSTAANREM axiom — There Is No Such Thing As A National Real Estate Market or a National Economy. The same is true regarding the number of new home sales on a regional basis. Other factors such as job growth, rental rates and comparative price of existing home sales, along with availability come into play.
The next table shows regional home sales as a percentage of national home sales, along with the change from June 2017 to June 2018. Note that more than eight-out-of-every 10 new home sales are either in the South or the West, with 57.2 percent in the South as of June.
New and existing home median prices are shown in the following graph commencing in 2001, prior to the start of the housing bubble. The second graph has the same data commencing 2015.
Fannie Mae’s July 2018 forecast expects a 10.1 percent increase in new single family home sales from 2017 to 2018 and a 5.4 percent gain from 2018 to 2019. The Mortgage Bankers Association July 2018 forecast shows new home sales rising 6.5 percent in 2018 year-over-year and 1.7 percent in 2019.
To read the entire Census Bureau news release on new home sales click https://www.census.gov/construction/nrs/pdf/newressales.pdf