US new home sales climb in June to three month high but prices come off record levels
Sales of new US homes rose slightly in June, hitting their highest level in three months, as demand for housing remained stiff, according to government data released on Wednesday.
But prices retreated from an all-time high and supplies rose, suggesting new construction could be offering some relief to what has been an exceedingly tight market, according to the Commerce Department report.
Sales of new homes rose 0.8 per cent for the month to an annual rate of 610,000, seasonally adjusted, marking the second straight increase and matching analyst expectations.
That put home sales last month 9.1 per cent higher than June of last year.
The median price retreated from May’s all-time record, falling 4.2 per cent to $310,800. The sales pace put the supply of available homes at 5.4 months, up slight from 5.3 months in May. The stock of homes for sale rose to its highest level in eight years at an estimated 272,000, the report said.
Sales jumped in the western and mid-western United States, with sales of single-family homes in those regions rising by 10 per cent and 12.5 per cent, respectively. But activity was flat in the Northeast and fell more than six per cent in the South.
Despite the consecutive increases, the data for June showed some signs of weakness, with net revisions bringing total sales since the start of the year down by 27,000.
“The results were good but not great,” economist Joel Naroff said in a client note. “We need the housing market to be strong if the economy is to accelerate. The sector has been adding to growth, but not by much.”
In contrast to this report, industry numbers released this week showed sales of existing homes fell last month, and realtors blamed a shortage of available homes and the tight market, which is pushing prices higher.
Seven years of uninterrupted job creation and steady economic recovery, with a new generation of millennials ready to enter the housing market, has created strong demand, potentially pricing some would-be homeowners out of the market.
In addition, analysts say a tight labour market, local regulations and other barriers have held down construction, making the shortage more acute.