New U.S. single-family home sales rose slightly in June but came in below expectations, as elevated mortgage rates continued to dampen demand and pushed housing inventory to levels not seen since late 2007.
According to the Commerce Department, new home sales increased by just 0.6% to a seasonally adjusted annual rate of 627,000 units. May’s figure was left unchanged at 623,000 units. Economists surveyed by Reuters had predicted a stronger gain to 650,000 units.
On a year-over-year basis, sales were down 6.6%, underscoring the ongoing strain on the housing market. Mortgage rates on 30-year fixed loans have hovered just below 7%, following the Federal Reserve’s decision to pause rate cuts amid inflation concerns tied to President Donald Trump’s protectionist trade policies.
The Fed is widely expected to maintain its benchmark interest rate between 4.25% and 4.50% at next week’s policy meeting. After cutting rates three times in 2024, the last reduction came in December.
Government data also showed single-family housing starts hit an 11-month low in June, and permits for future builds fell to the lowest level in over two years. Analysts believe residential investment likely continued to drag on GDP in Q2.
Regionally, new home sales rose 5.1% in the South and 6.3% in the Midwest, while the Northeast plunged 27.6% and the West fell 8.4%.
The number of unsold new homes on the market grew to 511,000, the highest since October 2007, up from 505,000 in May. At the current sales pace, it would take 9.8 months to clear this supply—up from 9.7 months a month earlier. The rising inventory is putting downward pressure on prices.
The median price of a new home fell 2.9% year-over-year to $401,800 in June. A recent National Association of Home Builders survey showed a growing number of builders have started cutting prices to attract hesitant buyers, with price reductions hitting the highest rate since 2022.
