High mortgage rates. High home prices. Economic uncertainty over the effects of tariffs. These are all reasons supporting a steep plunge in new single-family homes.
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In May, new home sales totaled 623,000 on a seasonally annualized rate, falling by 13.7% from April and 6.3% year-over-year (YoY).
Meanwhile, inventory of new homes continues to grow, reaching an seasonally-adjusted estimate of 507,000, increasing by 1.4% from April and 8.1% YoY. The figure implies a home supply of 9.8 months.
Affordability Remains Major Issue for Homebuyers
Home prices remain near all-time highs, with the median price increasing by 52% compared to 2019, according to National Association of Realtors (NAR) Chief Economist Lawrence Yun. On top of that, the 30-year fixed-rate mortgage sits at an elevated 6.81%, discouraging potential buyers.
The housing market remains stuck in a rut, which doesn’t bode well for the stock market given that home sales are a gauge of consumer sentiment. Home sales benefit the financial sector and can lead to related purchases, like home improvement services, appliances, and furniture.
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