Sales of new homes in the US rose to almost a 13-year high in June, driven by record-low borrowing costs and evidence that residential property is a bright spot for the economy.
Purchases of new single-family homes rose 13.8% to 776,000 a year, after an upward revised increase of 19.4% in May, government data on Friday showed. The pace in June exceeded all economists' forecasts in a Bloomberg survey with an average estimate of 700,000. The median sales price increased 5.6% year over year to $ 329,200 as inventories shrank.
Mortgage lows at historic lows, along with more stable finances for higher-income Americans during the pandemic, will fuel demand and will help trigger a housing recovery that will help the economy recover. However, sales can be below the level of the pre-pandemic, as millions of jobs have been lost and coronavirus cases have been reported in many regions of the country.
An S&P measurement of homebuilder stocks reduced losses and was 0.8% lower in New York at 10:17 a.m. after losing 1.9% previously.
All four major US regions saw higher home sales in June. Purchases increased 18% in the west and 7.2% in the south. In the northeast, the smallest of the four main regions, sales increased by 89.7%.
The supply of new houses declined to 4.7 months at the current sales pace, an almost four-year low. The report also showed signs that builders' backlogs are increasing. The number of properties sold for which construction has not yet begun rose to 233,000, the highest since November 2017.
New homes account for about 10% of all purchases and are considered as a more current barometer than sales of previous properties, which are calculated when the contract is concluded. National Association of Realtors data this week showed that sales of existing homes rose sharply in June.
Changes in seasonally adjusted data for new homes are volatile and have a large error rate. According to the US Census Bureau, there is a 90% chance that the monthly percentage change will be between a 4% decrease and a 31.6% increase. The report is published jointly by Census and the Ministry of Housing and Urban Development.