The numbers: U.S. new home sales plunged 8.1% to a seasonally-adjusted rate of 590,000 in June, from a revised 642,000 in the prior month, the Commerce Department reported Tuesday.
The number of new homes sold is the lowest since April 2020, during the depths of the coronavirus pandemic. Sales have fallen since hitting a peak of 1.04 million in August 2020.
Analysts polled by the Wall Street Journal had forecast new home sales to come in at 660,000 in June.
Year-over-year, new home sales are down 17.4%.
New homes sales rose a revised 6.3% to 642,000 in May compared with the initial estimate of a 10.7% gain to 696,000. The new home sales data are often revised.
Key details: The median sales price of new homes sold in May was $402,400. The supply of new homes for sale rose by 10.7% between May and June, equating to a 9.3-month supply.
That’s the highest figure since 2010, Stephen Stanley, chief economist at Amherst Pierpont, said in a note.
Sales fell in the Northeast, the South and the West, but rose dramatically in the Midwest by 42.3%.
Big picture: The Federal Reserve’s interest rate hikes have effectively cooled demand in the U.S. housing market. The average on a 30-year fixed-rate mortgage is 5.54%. Higher borrowing costs and elevated home prices have pushed would-be homeowners into the rental market, pushing rents across the top 50 cities in the U.S. up for the 16th month in a row, to a new record level of $1,876 in June.
What they’re saying: Expect further declines in new home sales in the coming months, Ian Shepherdson, chief economist at Pantheon Macroeconomics, wrote in a note.
“We think sales will fall to about 400-to-450K by the late fall,” he stated.
Market reaction: The Dow Jones Industrial Average DJIA, -0.71% and the S&P 500 SPX, -1.15% were both down in early trading on Tuesday. The yield on the 10-year Treasury note TMUBMUSD10Y, 2.806% fell to 2.739%.