September 22, 2023

U.S. Housing Sales and Prices Remain Weak

A separate report on Tuesday showed home prices in major American cities rose for the second straight month in May. But after adjusting for seasonal buyers, prices actually fell in a majority of markets.

The Commerce Department said sales of new homes fell 1 percent in June to an annual rate of 312,000. That’s less than half the 700,000 new-home sales that economists say is typical in healthy markets.

Sales fell to record lows in the Northeast and West. The median price of a new home rose to $235,200 in June, up 5.8 percent from May, according to the Commerce Department report.

Last year was the worst for new-home sales on records dating back a half century, but through the first six months of this year, sales are lagging behind last year’s totals.

In June, new-home sales fell to record lows in the Northeast and West. The median price of a new home rose to $235,200 in June because of the influx of spring buyers. The median price is not adjusted for seasonal factors.

The Standard Poor’s/Case-Shiller home-price index said May prices increased in 16 of the 20 cities tracked for an average of 1 percent. Over the past 12 months, prices have fallen in 19 of the 20 cities tracked.

Housing remains the weakest part of the American economy. High unemployment, larger down payment requirements and tougher lending standards are preventing many people from buying homes. And some potential buyers who can clear those hurdles are holding off, worried that home prices have yet to bottom out.

Last year was the fifth straight year that new-home sales fell. That followed five straight years of record-high sales, when the housing market was booming.

Still, all home sales are weak. Sales of previously occupied homes fell for a third straight month in June and are lagging last year’s sales of 4.91 million homes sold last year, the fewest since 1997. In a healthy economy, people buy roughly 6 million existing homes annually.

While new homes represent less than one-fifth of the total housing market, they have an outsize impact on the economy. Each new home creates an average of three jobs and $90,000 in taxes, according to the National Association of Home Builders.

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