July 2017 New Home Sales

New homes sales were weak in July 2017 according to data from the Census Bureau.  Signed contracts declined to 571,000 on an annualized basis, falling 59,000 units.  However, there were substantial upgrades to the prior two months’ tallies adding a combined 30,000 to May and June.  Notwithstanding the upgrades to the prior periods, July’s figure is the worst of the year.  Additionally, the year-over-year tally declined 8.9 percent, the lowest reading since June 2014. 

Regional data were mixed but mostly lower.  Starting with the good news, Midwest transactions increased 6.2 percent, but it only gets worse from there.  Sales in the South (the largest region) fell 4.1 percent.  Signed contracts in the West plummeted 21.3 percent, and the Northeast fell even further, declining 23.8 percent. 

While sales were sluggish, inventory levels rose.  There were 4,000 net new homes on the market at the end of the period for a total of 276,000 units.  Based on July’s transaction pace, this represents 5.8 months of sales, increasing from 5.3 months in June. 

Price proxies were mixed.  The median priced home was $313,700 which is up $2,900 in the period.  However the average price declined to $371,200 from $379,500 in June.

New home sales continued slowing in July.  This indicator has declined in two of the past three quarters and is not off to a good start in the current quarter.  Additionally, the year-over-year tally is negative.  While new homes sales are not a large contributor to our nation’s output, these transaction have many knock-on effects which could suffer if a weaker trend is developing.  Atlas will pay close attention in the months ahead, monitoring for signs of additional fragility.