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26/06/24
113
New Home Sales Data Lower Than Expected
The United States Census Bureau’s report on June 26 revealed a decline in sales of newly built homes in May as mortgage rates were sustained on the high side. New home sales declined by 11.3 percent in May from March to 619,000, representing the steepest monthly fall since September 2022 as well as the lowest level in six months.
“Sales of new single‐family houses in May 2024 were at a seasonally adjusted annual rate of 619,000… This is 11.3 percent (±15.5 percent)* below the revised April rate of 698,000 and is 16.5 percent (±16.2 percent) below the May 2023 estimate of 741,000,” reads the report.
In terms of sales price, the median sales price of new houses sold last month was $417,400, while the average sales price was $520,000. The seasonally‐adjusted estimate of new houses for sale at the end of May was 481,000.
Mortgage rates rose to their highest level since the beginning of the year early last month and have continued to decline. The borrowing costs are expected to be reduced in 2024, but the Fed officials see just one rate cut.
Fed members came up with hawkish comments, prompting a rise in U.S. treasures and strengthening the USD. Markets are considering their comments hawkish because they agree that the apex bank will continue to exercise caution about possible rate cuts in 2024. Some members have expressed the possibility of not seeing any cuts in 2024.
Homebuilders in the United States are influenced by high interest rates and concerns that they may remain higher for longer. Sentiment among homebuilders has been dwindling, taking a toll on the construction of new homes.
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