• July new home sales fell 9.4 percent from June and 8.9 percent from a year ago, to 571,000 (SAAR), according to the Census Bureau — the lowest level since December 2016. Prior months’ sales figures were revised upward.
• Inventory of new homes for sale nationwide rose 1.5 percent from June and 16.5 percent from a year ago. Seasonally adjusted inventory levels have risen or remained flat in each of the past 12 months.
• The median, seasonally adjusted sale price of new homes sold in July was $320,100, up 2.7 percent from June and 6.5 percent from July 2016, but just shy of all-time highs set in May.

Sales of new homes fell year-over-year in July, the first annual decline in more than a year and a disappointing bump in the road in what has otherwise been a good, not great, year for new home sales. The decline was driven by annual drops in home sales activity in every region except the booming West. The data should be read with caution, since they can be volatile and will be revised in the months ahead. Looking at construction activity, new home starts have been slowly but steadily rising, reflecting strong overall fundamentals and a sound economy that’s in better shape than at any point in the past decade. Home builders clearly recognize both that there is enormous demand for new homes and that for-sale inventory levels remain woefully inadequate to meet it. Inventory of new homes for sale has steadily increased over the past year, and while it’s clearly not coming on line as fast as home buyers might like, it’s probably coming to market as fast as can reasonably be expected given the difficulties and costs involved in securing land, labor, lumber and permits. New homes are selling much earlier in the process, with the share of new homes sold after construction has finished near all-time lows, reflecting both strong demand and a reluctance of builders to carry construction risks. But while prices for new homes are near all-time highs, they’re growing at a slower pace than at any point since 2011 as a number of builders attempt to target entry-level and first-time buyers on tighter budgets. This is challenging given high building costs, but it’s also a potentially rewarding strategy given the outsized demand for entry-level homes. Particularly in light of exceptionally tight inventory of existing homes, the number of new homes hitting the market remains well short of demand — but it is slowly catching up. The scars of the housing bust are still fresh in the minds of many home builders, so it is not surprising that many are taking a cautious approach to ramping up production.