New homes are selling at the weakest pace in seven months and it’s been a slower summer for homebuilders than we first thought, the Census Bureau said today.
It’s a disappointing report. Even though new construction makes up only about 8 percent of the overall housing market, it accounts for an outsized share of job creation and consumer spending, and we look to it for a read on how the economy’s doing in general. In June, new home sales clocked in at a 482,000 annual pace, Census reported, down nearly 7 percent from May and well below the 548,000 forecast in a Bloomberg survey. While this year is better than last–up more than 18 percent from a year ago–new single-family sales are at their lowest since November and about where they were a quarter century ago.
While it’s rarely a good idea to put much stock in a single piece of economic data, the trend in new home sales has been disappointing for a while. Builders simply aren’t constructing enough houses to accommodate population and household growth. It’s one factor of many contributing to the rapid rise in housing costs.
Today’s report is at odds with other data that show a housing market bolstered by job gains, growing household formation and low mortgage rates. First-time buyers are starting to come back, credit is becoming easier to get and the economy remains on a slow path to recovery.
And builders remain upbeat. The National Association of Homebuilders today chalked up the disappointing data to the market’s “ups and downs.”
Thinking about buying a newly constructed home? Check out our 10 tips for getting a better deal when buying new construction.
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