The U.S. market for new single-family homes experienced a minimal increase in June sales which failed to meet market predictions because high mortgage rates kept potential buyers away. The sales increase of 0.6% resulted in a seasonally adjusted annual rate of 627,000 which fell below the predicted 650,000.
The new home sales decreased by 6.6% during the past year because of rising interest rates and declining affordability. The current 7% average 30-year fixed mortgage rate acts as a significant deterrent for potential homebuyers.
The housing inventory reached its highest point since 2007 when it reached 511,000 available homes which translates to 9.8 months of supply based on current sales activity. The current housing surplus is creating downward pressure on prices and may reduce homebuilding output during the second half of this year.
The sales numbers showed different patterns across regions because they increased in the South and Midwest but decreased in the Northeast and West. The second quarter GDP growth received a negative impact from residential investment because construction activities and brokerage commission payments decreased according to analysts.
The housing market will continue to face challenges throughout 2025 because the Federal Reserve plans to maintain interest rates at current levels despite rising inflation.
