According to an analysis by the National Association of Home Builders, new home sales rose unexpectedly in July after significant revisions to the previous month’s data.

Sales of newly built single-family homes rose 10.6% in July to a seasonally adjusted annual rate of 739,000, after a sharply higher revision in June, according to newly released data from the U.S. Department of Housing and Urban Development and the U.S. Census Bureau. The pace of new home sales in July increased 5.6% from a year earlier. Following sharply higher revisions to May and June data, new home sales from January to July 2024 in 2024 increased 2.6% compared to the same period in 2023.

While mortgage rates declined in July, the Census-estimated gains in new home sales are inconsistent with recent industry survey data, including the NAHB/Wells Fargo Housing Market Index, which showed weakness in the current sales index. Census-estimated new home sales are often volatile and subject to revision, and it is possible that the July sales estimate will be revised downward next month. The NAHB is forecasting gradual improvements for the housing sector as the Fed eases monetary policy and mortgage rates trend lower.

A new home sale occurs when a purchase agreement is signed or a deposit is accepted. The home can be in any stage of construction: not yet started, under construction, or completed. In addition to adjusting for seasonal effects, July’s figure of 739,000 units is the number of homes that would be sold if that pace continued over the next 12 months.

The inventory of new single-family homes fell slightly to 462,000 in July, a 1.1% decrease from the previous month. Only 16.7% of the inventory for sale consists of completed, move-in ready homes (102,000), although this share of inventory increased by 44% from a year ago.

Total new home inventory is equivalent to 7.5 months of supply at the current pace of construction. While this reduced months of supply is above the commonly used balance measure of 6, total home inventory is lower. Given a low inventory of resale properties, total home inventory (new and existing) is 4.5, which remains low.

The median price for a new home was $429,800, up 3.1% from last month and down 1.4% from the same period last year.

Regionally, year-to-date new home sales are up 5.4% in the Northeast, 22.1% in the Midwest and 6.1% in the West. In the South, new home sales are down 2.4%.