Amid a plunge in Homebuilder Confidence, record low affordability, tumbling single-family starts and permits, and multi-decade lows in mortgage applications, it is no surprise that analysts expected a 5.9% MoM plunge in new home sales in June (especially after the surprise 10.7% MoM panic-buying surge in May). The consensus was right in direction but off in magnitude as new home sales plunged 8.1% MoM in June and the 10.7% surge in May was revised down to just +6.3% MoM…
New Home Sales have fallen for 5 of the last 6 months.
The New Home Sales SAAR has tumbled to its lowest since the nadir of the COVID lockdowns in April 2020…
A potential silver lining is that inventory is finally on the rise with 9.3 months of supply seen in June, up from 8.4 in the prior month; however, the median new home price rose 7.4% y/y to $402,400 (and the average selling price is at $456,800.)
This new home sales print comes on the day that Pulte Homes admits buyers have hit a wall and is “dialing back” its spec-home-starts, noting that the homebuilder’s cancellation rate more than doubled to 15% in Q2 from 7% in the year-ago quarter, as soaring home prices and Mortgage Rates hinder affordability.
“The recent 200-basis point increase in mortgage rates has impacted affordability, but we continue to believe the desire for homeownership is high and the long-term outlook for housing remains positive,” said CEO and President Ryan Marshall.
Most notably perhaps was Marshall’s admission that the uptick in cancellations has been in the last 30-60 days, perhaps mirroring the plunge in homebuilder confidence (and Walmart) as the ‘strong American consumer’ appears to have pulled back into its shell.
