Sales of newly built houses in the United States fell by more than expected in July, confirming a slump in the housing market seen in surveys of home builders.
Purchases of new single-family homes fell 12.7 percent compared with the previous month to a seasonally adjusted annual rate of 511,000, the Commerce Department said Tuesday.
Compared with a year ago, sales are down 29.6 percent.
Economists had forecast a new home sales rate of 575,000. The prior month’s estimate was revised down to 585,000 from 590,000.
The Federal Reserve has been hiking its interest rate target in an effort to tame inflation. The overnight borrowing rate for banks has risen from a range of between zero to 0.25 percent to a range of 2.25 to 2.50 percent since March. Mortgage rates have jumped higher, rising from around three percent at the start of the year to nearly six percent in July. This has hurt home affordability and driven down demand for houses.
The median sales price of new houses sold in July 2022 was $439,400. That represents a gain of around eight percent compared with a year ago, a far slower pace of price appreciation than the above 20 percent figures seen last year and earlier this year.
The seasonally-adjusted estimate for the supply of new houses for sale at the end of July was 464,000. This represents a supply of 10.9 months at the current sales rate. A four to six month supply is considered a balanced market.
Home builder confidence has fallen for eight months. In July, the NAHB/Wells Fargo housing market index unexpectedly dropped six points to a reading of 49, below the breakeven point indicating a deteriorating market. Housing starts have fallen to their lowest level since the initial lockdown months of the pandemic.