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New sales of single-family homes in the US have declined, highlighting continued weakness in the housing market driven by affordability pressures and subdued consumer sentiment. Although the previous month's figures were revised upwards, persistently high mortgage rates, slow wage growth and abundant housing supply have kept demand weak. Builders are lowering prices to attract buyers, but economists suggest conditions will remain challenging, particularly with labour market softening and inventories hovering near levels last seen over a decade ago.
New single-family home sales in the US slipped by 0.6 per cent to an annualised rate of 652,000 units. The latest report followed an upward revision to the earlier month's data, yet overall demand has continued to suffer as borrowing costs remain elevated. Economists believe the sector is unlikely to see quick relief, given the dual pressure of housing affordability constraints and slower job growth. Advertisement
Mortgage rates have eased modestly but are still considerably higher than wage growth, leaving many households priced out of home ownership. A Nationwide economist stated that affordability challenges and softer labour market trends are expected to weigh on housing demand in the months ahead.
Homebuilders are grappling with rising stock as new-home inventories remain elevated, reaching levels not seen since 2007. This has resulted in falling prices, with the median price of a new home declining 5.9 per cent year-on-year to USD 403,800. A majority of transactions are taking place in homes valued below USD 499,000, while the stock of completed yet unsold homes has climbed to a sixteen-year high.
An analyst from Oxford Economics noted that a rising backlog of completed properties is likely to dampen any near-term rebound in housing starts, as developers continue to focus on cutting prices to sustain sales momentum.
Even as builders reduce prices, buyers remain cautious and inventory levels stay high. Analysts maintain that without a meaningful reduction in borrowing costs or stronger wage growth, the recovery in new-home sales is expected to be limited, leaving the market under pressure for the foreseeable future.
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