U.S. purchases of new homes fell in June to the slowest pace in eight months, while the median selling price declined to the lowest in more than a year, adding to signs the housing market is cooling, according to government data Wednesday.
Highlights of New Home Sales (June)
- Single-family home sales dropped 5.3 per cent m/m to 631k annualized pace (est. 668k) after 666k rate (revised from 689k)
- Median sales price decreased 4.2 per cent y/y to US$302,100
- Supply of homes at current sales rate climbed to 5.7 months, the longest since August, from 5.3 months
Demand weakened in three of four U.S. regions, including a 7.7 per cent drop in the South, the largest area. The decline in sales left 301,000 homes available nationwide in June, the most since March 2009.
The decrease in the median price reflected a bigger share of homes sold in the US$200,000 to US$300,000 range and a smaller share above that level. That suggests demand remains steady at lower price points amid a strong job market and fairly elevated confidence, while buyers may be reluctant to commit to more expensive properties.
One encouraging sign for the economy was that the number of properties sold in which construction hadn’t yet started rose to a four-month high, a sign builders will stay busy in coming months. A rising pipeline indicates residential construction will continue to boost growth.
New-home sales, tabulated when contracts get signed, account for about 10 per cent of the market. They're considered a timelier barometer than purchases of previously owned homes, which are calculated when contracts close and are reported by the National Association of Realtors. Existing home sales fell in June for the third straight month, according to data earlier this week.
- Purchases of new homes fell to a 361,000 pace in the South, dropped 13.4 per cent in the Midwest to 71,000 and 5.2 per cent in the West to an almost one-year low of 147,000
- Commerce Department said there was 90 per cent confidence that the change in sales last month ranged from a 22.4 per cent drop to an 11.8 per cent increase, underscoring the volatility of the data
- Report released jointly by the Census Bureau and Department of Housing and Urban Development in Washington