New Home Sales Decrease to 675,000 Annual Rate in August; Median New Home Price is Down 13% from the Peak

New Home Sales
Sales of new single‐family houses in August 2023 were at a seasonally adjusted annual rate of 675,000, according to estimates released jointly today by the U.S. Census Bureau and the Department of Housing and Urban Development.

This is 8.7 percent below the revised July rate of 739,000, but is 5.8 percent above the August 2022 estimate of 638,000.

Sales Price
The median sales price of new houses sold in August 2023 was $430,300. The average sales price was $514,000.

For Sale Inventory and Months’ Supply
The seasonally‐adjusted estimate of new houses for sale at the end of August was 436,000. This represents a supply of 7.8 months at the current sales rate.

Actual sales – not seasonally adjusted, and not annual rate of sales – fell to 54,000 houses, the lowest since December last year, down by 5.3% from 2019, though compared to the sales plunge a year ago, it was up by 5.9%.

So despite lower prices, ample supply, and large-scale mortgage-rate buydowns, sales remain below the pre-pandemic levels and well below the activity in 2021.

Homebuilders are trying all kinds of stuff to get sales going in this environment of 7%-plus mortgage rates, including cutting prices, building at lower price points, piling on incentives (such as free upgrades), and the biggie, buying down mortgage rates, which can get expensive for builders. Neither incentives nor mortgage-rate buydowns are reflected in the prices of homes sold, and yet prices have dropped, and sales have dropped too below 2019 levels, and inventory increased, and months supply jumped. For homebuilders, who cannot sit out this market because their business is to build and sell homes no matter what the market does, it’s not an easy environment.