Sales of new single-family homes fell 0.7% to an annual rate of 298,000 in July following downwardly revised readings for May (309,000 vs. 315,000) and June (300,000 vs. 312,000). The level of new home sales is close to the record low registered in August 2010 (see Chart 1).
In July, there was a 6.6-month supply of unsold new homes in the market, which is a significant drop from the peak reading of a 12.2-month supply in January 2009. Alternatively, the number of unsold homes also helps to assess the status of the home builders inventory. The number of new houses for sales during July hit a new record low of 165,000 (see Chart 2), which means builders are not holding a whole lot of inventory. This observation has been part of commentaries for several months and it is cited as supportive for builders to start construction of new homes. Unfortunately, the economic recovery has been anemic in the first-half of the year and hiring conditions remain weak. Both of these factors bode poorly for home construction activity.
The median price of a new single-family home fell 6.25% in July to $222,000 and it nearly wiped out the gain posted in June. However, the median price of a new single-family home moved up 4.7% from a year ago.
Chart 4 summarizes the current depressed status of the housing sector, with starts and sales of homes persistently holding close to recession lows even after nearly nine quarters of economic growth.