The numbers: U.S. new home sales plunged 12.6% to a seasonally-adjusted rate of 511,000 in July, from a revised 585,000 in the prior month, the Commerce Department reported Tuesday.
The pace of sales in July is the lowest level since January 2016.
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 574,000 in July.
Year-over-year, new home sales are down 29.6%.
New home sales fell a revised 7.1% to 585,000 in June compared with the initial estimate of a 8.1% drop to 590,000. The new home sales data are often revised.
Key details: The median sales price of new homes sold in July was $439,400, up from $414,900 in June, but below the record $458,200 in April.
The supply of new homes for sale rose by 18.5% between June and July, equating to a 10.9-month supply. The supply of new homes is the highest since March 2009, and is one of the highest levels on record.
Regionally, sales of new homes fell the most in the Midwest, followed by the West and South. New home sales rose in the Northeast by 13.3%.
Big picture: Builders and realtors said housing is in a “recession,” as weaker data month after month has made housing one of the softest parts of the economy.
But buyers and sellers say normalcy is finally returning to the market.
Home sellers are adjusting prices based on demand cooling, and buyers are seeing more opportunities in terms of inventory, and having to face fewer bidding wars.
Some regions are losing steam faster than others, like the South and the West, which was home to many pandemic hotspots, including Miami, Fla., Phoenix, Ariz., and Austin, Tex.
Market reaction: The Dow Jones Industrial Average DJIA, -0.48% and the S&P 500 SPX, -0.19% were both up in early trading on Tuesday. The yield on the 10-year Treasury note TMUBMUSD10Y, 3.000% rose to 3.04%.