New home sales dipped in June but are well above levels from a year ago
Prices also fell slightly, nearly closing the gap between new and existing home prices.
Key points:
- The median price of a new home in June was $415,400, down from $417,300 the previous month.
- Newly constructed homes and existing homes cost nearly the same price at this moment.
- New home inventory still remains plentiful, though buyers may have to make trade-offs.
New home purchases were down slightly in June, dropping by 2.5%, but sales were substantially higher — by nearly 24% — than they were a year ago.
Buyers closed on 697,000 newly constructed homes in June according to the latest figures from the U.S. Census Bureau and HUD. According to the report, the median sale price for new homes in June was $415,400, while the average sale price was $494,700.
June's median sale price has dipped since this spring when buyers were typically paying around $440,000 for a new home in March and over $417,000 in May. Prices have fallen dramatically compared to the summer and autumn of 2022 when the median new home price approached $500,000 in October.
The price for an existing home, on the other hand, jumped to just over $410,000 in June, nearly closing the gap between new and existing home prices.
Supply of new homes healthy, for now
Low inventory due to homeowners' fear of losing their record-low mortgage interest rate has been a main culprit in driving up existing home prices in recent months, experts have noted. And with the cost of an older, existing home being more or less the same price as a brand new one, many buyers are opting for the latter.
While inventory remains tight for existing homes, there are still plenty of new homes on the market. There were 432,000 new homes for sale in June, the report notes, which translates to roughly 7.4 months of supply. However, permits for new homes have fallen off significantly, dropping nearly 25% since May 2022, meaning that the supply of new homes may slow in coming months.
Buyers forced to make more trade-offs
While the wave of new homes making their way through the pipeline provides much-needed inventory, it isn't a panacea, noted Dr. Lisa Sturtevant, chief economist for Bright MLS.
"The market for new homes is booming because the number of existing homes coming on the market has slowed to a two-decade low," she said. "As a result, it is forcing buyers to make trade-offs, in terms of both characteristics of the home as well as the home's location."
New developments are likely to be built on the outskirts of an urban core, which can impact commutes for work, school and shopping. For those who are working remotely, a new home farther from a city center could be a good option, Sturtevant suggested. But buyers who want to be close to the action and are holding out for an existing home may have to remain patient a bit longer.
"For others who are having to commute even two or three days per week, buying in a new housing development brings up the whole issue of commuting. Some of these buyers may want to wait for the inventory of existing homes to increase, but that supply is likely going to stay very low in the near-term."