The numbers: Sales of new single-family homes increased sharply for the second consecutive month in June, taking the sales rate to its highest level in 13 years, according to data released on Friday.
The annual sales pace for new home sales in the United States increased 13.8% last month to 776,000, the Commerce Department said Friday. That is above the previous cycle high of 774,000 reached in January and is the strongest since July 2007, according to the Mortgage Bankers Association.
Economists surveyed by MarketWatch expected a June sales rate of 710,000, compared to an original May estimate of 676,000. On Friday, the government revised the May rate to 682,000. That brought May’s increase in new home sales to 19.4%.
What happened: Sales increased in all four regions, with the largest gain of 89.7% in the Northeast. June sales pace is 6.9% higher than the previous year.
The median price for new homes was $ 329,200 in June. That’s 5.6% above the price a year ago. An estimated 307,000 new homes would be for sale, equivalent to a limited supply of 4.7 months. A 6-month supply of housing is generally considered indicative of a balanced market.
Big picture: Just last month, an economist said it could take two years for new home sales to rise above the January level. Housing is leading the recovery driven by low mortgage interest rates. Some analysts also see a boost from workers deciding to move to the suburbs now that they can work from home. Mortgage applications for home purchases peaked at 11 years earlier this month. Still, the spread of the coronavirus in July adds a certain downside risk to the sector.
What are they saying? “The impact of falling mortgage rates, down 80 basis points this year, is more than offsetting the wave of Covid-induced job losses, which appear to be hitting younger tenants rather than potential buyers housing; the average shopper is 47, while the average restaurant employee is 29, ”said Ian Shepherdson, chief economist at Pantheon Macroeconomics.
Market reaction: Shares opened lower on Friday due to renewed tension between the Trump administration and China. The Dow Jones Industrial Average DJIA,
It fell about 60 points in the first operations, from previous lows.
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