Data released Tuesday showed that new home sales fell more than economists had forecast in June, signaling that the housing market is suddenly unraveling as experts worry that the slowdown could spill over into the broader economy. Triggering a recession.
About 590,000 new single-family homes were sold last month on a seasonally adjusted annual basis, down 8 percent from May’s 642,000 and falling sharply below analyst forecasts of 660,000, the Census Department reported Tuesday.
Declining demand is starting to hit prices: The median sales price of new homes fell from $449,000 last month to $402,400 in May — the lowest level since June 2021, after a record high of $457,000 in April.
Meanwhile, the number of new homes for sale rose 17,000 to 457,000—reflecting an eight-month run of current sales, or the biggest glut since late 2010, said Ian Shepherdson, chief economist at Pantone Macro, citing a recent slowdown in demand. Goods.
“The housing downturn is deepening and accelerating,” Shepherdson said, adding that new home sales fell at a 61% annualized rate in the second quarter and a continued decline in loan applications over the past few months added to the latest reading “saying no.” down”
Expressing a bleak outlook for the housing market, Atlanta homebuilder PulteGroup reported Tuesday that new orders fell 23 percent in the second quarter from a year earlier, as higher mortgage rates, lower affordability and lower consumer confidence led to lower demand and higher foreclosures. Buyers cancel their contracts.
The data comes a week after the National Association of Home Builders reported that homebuilder confidence fell to a two-year low in July as high inflation and supply chain constraints caused many builders to halt construction on homes.
Interest rates fell during the pandemic and demand for home purchases increased as more Americans began working from home. However, the Federal Reserve’s interest rate hike has taken a sharp turn since March, and some experts worry about the broader economic implications. Bank of America economist Michael Gapen said in a note to clients last week that gross domestic product contracted 1.5 percent in the last quarter, lowering his economic forecast following a stronger-than-expected decline in the housing market.
“What was a seller’s market in early spring has become a buyer’s market more or less overnight, as many potential buyers have either had their spending power drastically reduced or been forced out of the market due to rising mortgage rates,” he says. Shepherdson.
Mortgage rates, which have risen to 6 percent since the Fed began raising rates in June, were 2.5 percent higher than a year ago, and would reduce home-buying power by $123,500 when household incomes remain constant, First Finance’s chief economist estimates. Mark Fleming.
NAHB CEO Jerry Howard said on Fox News last week, “It’s been going down for the last seven months in a row, and that’s a huge drop.” “I think it’s just, ‘Somebody’s going to do something or we’re going to be in a recession.'”
Housing market ‘melt’ intensifies: Homebuilders halt construction as confidence hits two-year low. (Forbes)