New home sales in June slowed to a pace of 631k, 37k less than expected and May was revised down by 23k to 666k. The June figure is the slowest rate of new home sales since October 2017. Three of the four regions saw m/o/m sales declines and with a rise in the number of homes for sale, months’ supply rose to 5.7 from 5.3. That is the most since last August. The median home price fell 4.2% y/o/y to $302,100 which is the least since February 2017. Part of the reason for this is mix as there was a decline in the number of homes sold priced above $500,000.
Bottom line, today’s figure adds further evidence to the housing slowdown story in terms of transactions. Rising prices and mortgage rates have reached a pressure point in the affordability threshold, especially for first time buyers. With Millennials becoming a very important demographic category, the biggest demand for homes are those priced around $250,000 but that is where it is the least profitable for builders to build due to the pressures of rising labor costs and materials (thanks to tariffs).
NEW HOME SALES
Peter is the Chief Investment Officer at Bleakley Advisory Group and is a CNBC contributor.