Covid suburban dash comes to an end as US home sales drop for third straight month

Sales of new homes in the US fell for a third straight month in June, even as prices dipped from their record high and supply increased, according to US government data.

The seasonally adjusted annualised rate of 676,000 new homes sales reported by the Commerce Department last month was much less than expected and provided the latest evidence the real estate boom seen during the Covid-19 pandemic is tapering off.

“Demand is mean-reverting to its pre-Covid pace, after the dash to the suburbs triggered by the start of the pandemic,” says Ian Shepherdson of Pantheon Macroeconomics.

Data released on Monday shows that sales in June were 6.6 per cent lower compared to May’s downwardly revised rate, while the median sales price, not seasonally adjusted, declined to $361,800, down from its peak of $380,700 the month before.

Supply increased to 6.3 months at the current sales pace, rebounding from the low of 3.5 months seen last summer.

In 2020 buyers flocked into the real estate market, fueled by low mortgage rates and the disruptions to daily life created by the coronavirus.

Compared to the same month last year, sales were 19.4 per cent lower.

“We hope that a sustained strengthening in the labour market will boost activity again later in the year, but today’s data should be the final nail in the coffin of the ‘housing boom’ narrative in the media,” says Mr Shepherdson.

The fall in sales was uneven, with the Northeast seeing a massive 27.9 per cent decline, the South falling 7.8 per cent, and the West dropping 5.1 per cent.

Sales in the Midwest bucked the trend and rose 5.7 per cent.