ACRE Commentary: New home sales retreated in June reflecting the significant pullback in homebuilder confidence reported earlier in the month. Nationwide sales decreased 8.1% from May to a seasonally adjusted annual rate of 590,000, a decline of 17/4% from June 2021. Sales in Alabama, however, remained steady as the 1,003 new homes sold were equal to one year ago. New home sales in the state remained above pre-pandemic levels with June sales 12.9% above the 5-year average. However, declines of 5-10% are likely in the second half of the year as the Fed raised its benchmark rate by 75 basis points on July 27, 2022.
National new home prices retreated significantly in June, falling 9/5% from May but increased 7.4% from one year ago. Builders aggressively reduced prices in June, offering discounts to offset reduced consumer buying power from fast-rising mortgage rates.
New home prices in Alabama, however, continue to trend upwards with the statewide median sales price rising 4.9% from May and 28.5% from one year ago. Going forward, price growth is expected to moderate to 8-10% by year end as sales activity slows and inventory gradually rises.
Alabama’s new home market is somewhat undersupplied with 2.2 months of supply in June. The national market, on the other hand, is oversupplied with 9.4 months of supply. A balanced market will have between 4-5 months of new home supply.
Sales: According to the Alabama Realtors, new home sales in June (1,003 closed transactions) increased 4.4% from May and were equal to one year ago. New homes represented 14.0% of all residential sales in Alabama during June, up from 12.2% one year ago.
Inventory: New home listings (2,216) increased 15.7% from May and 99.1% from one year ago. At the current sales pace, all the active inventory on the market would sell in 2.2 months, up from 2.0 months in May and up from 1.1 in June 2021. The equilibrium point where buyers and sellers have roughly equal bargaining power is 4-5 months of supply.
Pricing: The median sales price for new construction in June was $344,831, a record high and an increase of 28.5% from one year ago and an increase of 4.9% from May. The differing sample size (number of residential sales of comparative months) can contribute to statistical volatility, including pricing. ACRE recommends consulting with a local real estate professional to discuss pricing, as it will vary from neighborhood to neighborhood.
New homes sold in June averaged 29 days on the market (DOM), 8 days faster than one year ago.
National Overview: According to the U.S. Census Bureau, new home sales nationwide were at a seasonally adjusted annual rate of 590,000 in June. This represents a 8.1% decrease from the revised May rate of 642,000 and is 17.4% below the June 2021 estimate of 714,000
The median sales price for new homes ($402,400) decreased 9.5% from May but increased 7.4% from June 2022.
Supply of new homes was estimated at 463,000 listings (seasonally adjusted) in June, an increase of 4.0% from the prior month and an increase of 32.3% from one year ago. Months of supply also increased from 5.4 one year ago to 9.4 in June 2022.
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Monthly New Home Sales Data: Athens, Baldwin County, Birmingham, Calhoun County, Gadsden, Huntsville, Lee County, Marshall County, Mobile, Montgomery, Morgan County, Tuscaloosa, and the Wiregrass region.
The Alabama New Construction Monthly Report is developed in connection with the Alabama Association of Realtors.