New Home Sales, which measures signed contracts on new homes, rose 10.6% to a 739,000-unit annualized pace, blowing out estimates of a 1% rise. Additionally, June was revised significantly higher, causing July’s gain to appear lower. When considering the revision, sales rose 20% from the originally reported figure in June, which is very strong.
There were 462,000 new homes for sale at the end of July, which was down from a downwardly revised 467,000 in the previous report. At the current pace of sales, there is 7.5 month’s supply, which is down from 8.4.
However, only 102,000 are completed, and when looking at the pace of sales versus homes that are completed (available supply), there is only a 2.2 months’ supply, up from 2.1 in June. This means that 360,000 homes are either not started or under construction, and it’s unclear how many will actually make it to the finish line as financing and carrying costs are very high.
The median home price was reported at $429,800, which is up 3.1% from the previous month and down 1.4% from last year.
What’s the bottom line? Unlike the Existing Home Sales counterpart, which measures closings and likely represented buyers shopping in May and June, this shows people signing contracts in July and shows that demand is picking up as rates have moderated…And this report does not include the further rate drop we have seen in August, which will likely lead to continued strength and acceleration in the sales figures.
