US new home sales hit eight-month low in June

US new home sales hit eight-month low in June

WASHINGTON: Sales of new US homes fell to an eight-month low in June, pointing to a possible slump in the housing market, government data showed on Wednesday (Jul 25).

Prices also fell while supplies rose, according to the Commerce Department, a sign that demand could be cooling.

The decline, which came with a downward revision for the May data, followed a string of downcast recent figures for home building and re-sales, suggesting the housing sector will contribute little to economic growth in the second quarter.

Sales of new single-family homes fell 5.3 per cent from May to an annual rate of 631,000. Economists had instead been expecting a 0.6 per cent increase.

Sales rose markedly in the Northeast, adding 36.8 per cent, but fell in the rest of the country.

The results were well within broad margins of error, however, and are subject to revision.

Meanwhile, the median price fell 2.5 per cent to US$302,100. The average price fell 0.5 per cent to US$363,300.

With 301,000 new houses on the market, inventories were up 1.7 per cent and represented a supply of 5.7 months at the current sales pace.

Analysts say rising mortgage rates and elevated prices have dampened appetite among some would-be home owners.

Federal income tax cuts in December also reduced some deductions for local property taxes, making home ownership more expensive.

Ian Shepherdson of Pantheon Macroeconomics said the statistics were "hopelessly unreliable."

"In short, the trend is what counts, not the monthly data, and the trend has been about flat since last fall, tracking the mortgage applications numbers with a lag of about three months," he said in a client note.

"The message from the mortgage data now is that sales will remain broadly steady through the early fall, at least."

Source: AFP/de