US new-home sales for June 2025 reached 627,000, falling short of the expected 650,000 but up from 623,000 in May. Sales increased by 0.6% compared to last month, which experienced an 11.6% drop. The supply of new homes slightly increased to 9.8 months from 9.7 months, indicating a high inventory level. The median sales price fell to $401,800, down 4.9% from May 2025 and 2.9% from June 2024.

New Home Sales and Prices

In June 2025, the average sales price of new homes was $501,000, a 2% drop from May 2025 but a 1.1% rise compared to June 2024. There are 511,000 new homes available, showing a 1.2% increase. Existing home sales for June were 3.93 million, below the estimated 4.00 million, and down from 4.04 million in the previous month. With the overall weakness in housing data, we suggest that derivative traders take a cautious and negative stance on housing stocks. The lower-than-expected new and existing home sales indicate that high interest rates are impacting buyer demand, which could lead to continued struggles for homebuilders and related businesses.

Market Analysis and Strategy

The concerning figure is the 9.8-month supply of new homes, far exceeding the healthy range of 4-6 months. Historically, such high inventory levels have preceded significant economic downturns, similar to the buildup to the 2008 financial crisis. We recommend purchasing put options on homebuilder ETFs like ITB and XHB, anticipating further price drops. The decline in the median sales price is especially concerning, suggesting the market is weakening and affordability is an issue. The 4.9% monthly decrease indicates that sellers must lower prices to attract buyers. This trend further supports a negative outlook for the entire housing sector, including construction materials and mortgage lenders. Continued weakness in the housing market increases the chances that the Federal Reserve will adopt a more dovish approach. With real-time mortgage rates around 7%, the central bank is seeing clear signs that its policy is restrictive. Thus, trades that could benefit from potential rate cuts, such as buying futures on the 10-year Treasury note, should be considered. We view this as a chance to prepare for increased market volatility as the economy adapt to this slowdown. The combination of declining sales, rising inventory, and price pressure creates significant uncertainty. Purchasing options on a volatility index like the VIX could serve as a wise hedge against a broader market downturn caused by issues in the housing sector. Create your live VT Markets account and start trading now.

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