Steel Markets

New Home Sales Return to Trend with Drop of 8.1%

July 25, 2014

New home sales were disappointing in June, dropping 8.1 percent below the revised rate May rate of 442,000 to a seasonally adjusted annual rate of 406,000, according to estimates by the US Census Bureau and Department of Housing and Urban Development.

The drop is “a return to trend rather than a change of direction,” says National Association of Home Builders (NAHB) analyst Robert Denk. The underlying trend since 2012 has been upward, said Denk, despite volatility in the second half of 2013 and early 2014.

“The numbers are a little disappointing, but May was unusually high and some pull back isn’t completely unexpected,” said Kevin Kelly, NAHB Chairman. “Our surveys show that builders are confident about the future and we are still seeing a gradual upward trajectory in housing demand.”

“With continued job creation and economic growth, we are cautiously optimistic about the home building industry in the second half of 2014,” said NAHB Chief Economist David Crowe. “The increase in existing home sales also bodes well for builders, as it is a signal that trade-up buyers can move up to new construction.”

Sales fell across all regions in June: Northeast -20 percent, South -9.5 percent, Midwest -8.2 percent, and West 1-9 percent.

Inventory of new homes at the end of June was 197,000—a 5.8 month supply at the current sales pace.