New-home sales in July 2018 were down 1.7 percent from June, but had 12.8 percent annual growth, according to the latest Commerce Department data.
The pace of new-home sales was the slowest since October 2017, and fell short of MarketWatch's forecasted sales pace. Jefferies LLC economist Ward McCarthy tells Realtor.com, “Housing activity in general has retreated from levels that were temporarily boosted by 2017 natural disasters that forced displaced households to seek alternative housing," adding that the market is adjusting to lower affordability levels, and changes to the federal tax code stemming from the Trump administration's Tax Cuts and Jobs Act.
Says Ward, “The good news is that there is no evidence of the type of imbalances that could cause a sharp downturn, such as heavy inventories and/or rising mortgage default and delinquency rates. We also note this is not the first temporary slowdown in housing activity this cycle.” Investors are also taking note. Shares of most big builders are down by double digits since the start of the year. PulteGroup, Inc. shares have lost about 12 percent, while Taylor Morrison Home Corp.’s stock has declined 19 percent.
