By Geoffrey Smith
Investing.com -- New single-family home sales fell to their lowest in over two years in July, rounding off a dismal series of monthly numbers for a U.S. housing market dominated by rising prices and mortgage rates that have made homes unaffordable for many.
The Census Bureau said that only 511,000 were sold in the month, down from 585,000 in June (a number that was also trimmed by 5,000 from its initial estimate). That was barely half the number seen at the peak of the pandemic, when the need for more space to allow remote working drove a frenzy for bigger suburban houses.
The news corroborates what has become a familiar narrative in recent months from the housing market, which has been the first sector in the economy to feel the effect of the Federal Reserve's repeated interest rate hikes. Housing starts and building permits also both fell on the month, as did sales of existing homes.
The Census Bureau's numbers indicated that affordability, rather than the scarcity of supply, was the chief problem last month. The number of houses for sale increased again across all categories to its highest since April 2008.
As such, analysts argued that the housing market may be close to pivoting, even if the Federal Reserve isn't.
"Price cuts are going to come fast and hard in the new home space," said EPB Macro Research's Eric Basmajian via Twitter, pointing to the sharp increase in the ratio of unsold houses to monthly sales. Having fallen to an all-time low of 3.3 in the first year of the pandemic, that ratio has now risen to nearly 11 times, and hasn't been higher since the subprime housing bubble imploded.
The slowdown, meanwhile, appears to be affecting an ever-broader cross-section of the economy. A business survey compiled by S&P Global, released earlier, showed U.S. manufacturing activity falling to its lowest in over two years this month.