New Construction Home Sales Surged in July

The notion that new home sales are being driven by buyers fleeing to the suburbs might be debatable, but the impact of tight inventory and low mortgage interest rates on the latest monthly figures is obvious.

“The new home market has everything going for it right now including limited resale supply, fear of missing out, heightened dissatisfaction of our current living situation, low mortgage rates, months of saving money, and increased demand from key demographic cohorts,” said Ali Wolf, chief economist at Meyers Research.

Sales of newly built homes soared across the nation in July, as pent-up demand from the shutdown spring market, urban flight and a new desire for more work-at-home space fueled the growth.
As measured by signed contracts, July new home sales jumped 13.9% compared with June and were a remarkable 36.3% higher annually, according to the U.S. Census. June’s reading was also revised higher. This is the strongest one-month pace since 2006.

This is the third consecutive month of sizable sales gains, after sales dropped dramatically in March and April, due to the onset of the coronavirus pandemic. Strong demand sucked up the inventory of newly built homes for sale, which fell to a four-month supply from a 4.7-month supply in June.

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