WASHINGTON -- Sales of new homes rose a modest 1% in July after a string of declines as new home prices soar to record levels.
Sales last month reached a seasonally adjusted annual rate of 708,000, the Commerce Department reported Tuesday. Sales had fallen in April, May and June as builders confronted surging lumber prices and a shortage of workers.
Home prices continue their upward trajectory to new heights. The median price of a new home sold in July climbed to an unprecedented $390,500, up 18.4% from a year ago, while the average sales price in July hit a record $446,000, up 17.6% from a year ago.
Even with the small sales gain in July, new home sales are 27.2% below the pace of a year ago. Sales peaked at a rate of 993,000 units in January but have cooled since then, though remain at historically high levels.
The surge in prices may start to slow in coming months as builders work to ramp up construction. The number of new homes for sale at the end of July stood at 367,000, up 5.5% from the June inventory level and 26.1% higher than a year ago.
“While demand for homes remains strong, high prices and backlogs in construction will temper sales in the months ahead,” said Nancy Vanden Houten, lead U.S. economist at Oxford Economics.
The National Association of Realtors reported Monday that sales of existing homes rose 2% in July compared to June to a seasonally adjusted annual rate of 5.99 million units while the price of an existing home sold in July climbed 17.8% from a year ago to $359,900, near the all-time high set in June.
For July, new home sales fell in two regions of the country and rose in two regions. Sales dropped 24.1% in the Northeast and were down 20.2% in the Midwest. Sales showed a slight 1.3% increase in the South and rose a stronger 14.4% in the West.