The July release for new home sales from the Census Bureau came in at a seasonally adjusted annual rate of 714,000 units, up 4.4% month-over-month from a revised rate of 684,000 in June. The reported sales figure is above the forecast of 705,000. The median home price is now at $436,700, up $20,000 from June on a nominal basis.
Here is the opening from the report:
New Home Sales
Sales of new single‐family houses in July 2023 were at a seasonally adjusted annual rate of 714,000, according to estimates released jointly today by the U.S. Census Bureau and the Department of Housing and Urban Development. This is 4.4 percent (±12.8 percent)* above the revised June rate of 684,000 and is 31.5 percent (±16.3 percent) above the July 2022 estimate of 543,000.
Sales Price
The median sales price of new houses sold in July 2023 was $436,700. The average sales price was $513,000. [Full Report]
For a longer-term perspective, here is a snapshot of the data series, which is produced in conjunction with the Department of Housing and Urban Development. The data since January 1963 is available in the St. Louis Fed's FRED repository here. We've included a six-month moving average to highlight the trend in this highly volatile series.
Over this time frame, we see the steady rise in new home sales following the 1990 recession and the acceleration in sales during the real estate bubble that peaked in 2005. Starting in 2011, there was a similar rise in new home sales that peaked near the end of 2020 and retracted for about 2 years. The most recent trend in new home sales has been one of steady growth, with new home sales increasing 8 of the past 10 months.
New Home Sales: The Population-Adjusted Reality
Now let's examine the data with a simple population adjustment. The Census Bureau's mid-month population estimates show a 78.3% increase in the US population since 1963. Here is a chart of new home sales as a percent of the population.
New single-family home sales are 20.8% above the 1963 start of this data series. The population-adjusted version is 32.2% below the first 1963 sales and at a level similar to the lows we saw during the Great Recession. Today's 30-year mortgage rate is 7.09% (per Freddie Mac).
For another perspective, here is a chart of the median new home sale prices back to 1963, inflation-adjusted. The data source is also the Census Bureau and can be found on the press release and website above. For inflation adjustment, we use the CPI-U, which is the consumer price index for all urban consumers. We've included a six-month moving average for this extremely volatile metric to give us a clearer sense of the trend.
Here's a zoomed-in look since 2000. The latest price of $436,700 is a 4.8% increase from last month and a 8.7% decrease from July of last year. However, after adjusting for inflation, the monthly change drops to a 4.6% increase while the annual change drops to 11.5% decrease.
ETFs associated with residential real-estate include: iShares Residential and Multisector Real Estate ETF (REZ).
ETFs associated with home builders include: Invesco Dynamic Building & Construction ETF (PKB), iShares U.S. Home Construction ETF (ITB) and SPDR S&P Homebuilders ETF (XHB).
This article was originally written by Doug Short. From 2016-2022, it was improved upon and updated by Jill Mislinski. Starting in January 2023, AP Charts pages will be maintained by Jennifer Nash at VettaFi | Advisor Perspectives
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