New-Home Sales Tank 12.8 Percent

David Deem

July new-home sales sunk, according to the Commerce Department's latest monthly report.

New-Home Sales: 635,000
-12.8 percent month-over-month
+4.3 percent year-over-year

For-Sale Inventory: 337,000
Months' Supply: 6.4
Average Price: $388,000
Median Price: $312,800

What the Industry's Saying
"It is worth keeping in mind that new-home sales are not simply a reflection of demand, but perhaps more importantly of supply. If builders construct 10 homes, then at maximum only 10 new-home sales are possible. Single-family housing starts this year are lower by 3 percent. The median days to complete a new-home sale after completion has been reasonably swift in June at 3.4 months. Demand is clearly there; supply not. One way to help new-home construction is to lower the cost of construction. There are many angles, including zoning, land price and labor availability, but material costs are also important. To the degree that tariffs are filtering into the broad supply-chain system and raising the price of building materials, home builders will face challenges. Also worth noting is that U.S. exports are down 2 percent from a year ago while imports are up by only 1 percent. A thriving economy has been associated with exports and imports rising by around 10 percent. If imports were to turn negative, then we could have a job-cutting recession. Imports declined in nine of the past 10 recessions." – Lawrence Yun, Chief Economist, National Association of REALTORS®

"It's important to keep things in context. Today's figures are on a host of monthly revisions that together indicate a robust trend. Sales are now up 4 percent year-to-date, with 2019 on pace to be the best year for new-home sales since 2007. With inventory and mortgage rates low, there's still plenty of runway for builders to add new homes to a market that's hungry for housing stock. Home builder sentiment remains strong despite persistent headwinds in the form of expensive labor, a shortage of land and growing signs that a recession could be on the horizon." – Matthew Speakman, Economist, Zillow



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