New home sales were on the rise in June, signaling a steady increase in demand for newly-built, single-family homes.
Although slight, the month-over-month increase in new home sales further strengthens the solid gains that have been reported so far in 2017. According to a July 26 press release from the National Association of Home Builders (NAHB), new homes sales rose 0.8 percent in June to a seasonally-adjusted annual rate of 610,000 units from a downwardly revised May reading. The data comes from the U.S. Department of Housing and Urban Development (HUD) and the U.S. Census Bureau.
“Although we saw modest gains this month, new home sales have risen nearly 11 percent since the start of 2017,” said Granger MacDonald, chairman of the NAHB and a home builder and developer from Kerrville, Texas. “Our members remain optimistic as the single-family housing market continues to recover.”
Despite the small, but steady climbs in new home sales activity, inventory remains tight.
“The month’s sales report is consistent with our forecast, and we should see further gains throughout the year as the labor market continues to strengthen,” said Michael Neal, NAHB senior economist. “While new home inventory rose slightly in June, it remains tight as builders face lot and labor shortages and increases in building material costs.”
According to the NAHB, the inventory of new homes for sale was 272,000 in June, which is a 5.4-month supply at the current sales pace. Any reading less than six months indicates a seller’s market, where the demand is greater than the supply.
On a regional scale, the western states are seeing the highest level of new home sales activity. New home sales rose 12.5 percent in the West and 10 percent in the Midwest.
In the Northeast, new home sales activity remained unchanged while it dropped 6.1 percent in the South.
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