News | advice | area guide

Property news, market trends and advice for property buyers and renters and plus Cambodia Area guide

New-Home Sales Sink to a 9-Month Low as Housing Market Wobbles


New-Home Sales Sink to a 9-Month Low as Housing Market Wobbles

Luke Sharrett/Bloomberg via Getty Images

The numbers: New-home sales ran at a seasonally adjusted annual 627,000 rate, the Commerce Department said Thursday.

What happened: Sales of newly-constructed homes missed the MarketWatch consensus forecast of a 640,000 pace and revisions to the prior several months were mostly downward. July’s pace was the lowest since last October. It stood 1.7% lower than June sales, but 12.8% higher than a year ago.

The median price of new homes sold in July was $328,700. That’s only 1.8% higher than the median price in July 2017.

Big picture: The government’s home-construction reports are based on small samples and are often revised heavily, making it hard to rely on any one month’s data. But for the year to date, sales are 7.2% higher than the same period last year. The recovery is still going on in the new-home segment of the market, and it remains grudgingly slow.

Builders are increasing their pace of construction but slowly. Tariffs are going to increase input costs, making the road ahead more difficult for the housing market, which desperately needs fresh supply.

What they’re saying: The slowdown in housing is becoming acute enough that even the Federal Reserve is watching. Minutes from the central bank’s last meeting show policymakers discussing housing starts and permits, as well as sales of new and existing homes.

“Housing activity in general has retreated from levels that were temporarily boosted by 2017 natural disasters –hurricanes and wild fires— that forced displaced households to seek alternative housing. The housing sector is also undergoing an adjustment to affordability that is less attractive than it was for most of the cycle, as well as changes in the treatment of SALT deductions in the federal tax code. That is the bad news,” said Ward McCarthy, Jefferies LLC economist.

“The good news is that there is no evidence of the type of imbalances that could cause a sharp downturn, such as heavy inventories and/or rising mortgage default and delinquency rates. We also note this is not the first temporary slowdown in housing activity this cycle.”

Market reaction: Investors are also taking note. Shares of most big builders are down by double digits since the start of the year. PulteGroup, Inc. shares have lost about 12%, while Taylor Morrison Home Corp.’s stock has declined 19%.

The post New-Home Sales Sink to a 9-Month Low as Housing Market Wobbles appeared first on Real Estate News & Insights | realtor.com®.

Source: Real Estate News and Advice – realtor.com » Real Estate News