WASHINGTON – Americans bought fewer new homes in June after sales jumped to a two-year high in May.
A new home under construction in Springfield, Ill., in this May 23, 2012, file photo.
The Commerce Department said Wednesday that sales of new homes fell 8.4% last month from May to a seasonally adjusted annual rate of 350,000. That's the biggest drop since February 2011.
Sales in the Northeast plunged 60% in June to the lowest level since November.
Nationwide, sales in May and April were revised much higher. June's sales pace is 15.1% higher than the same month last year. But sales remain well below the 700,000 annual rate that economists equate with healthy markets.
"While a housing recovery is under way … fits and starts are to be expected and clearly this summer is one of the 'fits,'" Dan Greenhaus, chief economic strategist at BTIG, said in a note to clients.
Home builder stocks fell sharply after the report came out.
The housing market has started to show signs of recovery this year.
Builders are more confident and are breaking ground on more homes. Mortgage rates are at record lows. And home prices nationwide have stabilized after losing a third of their value in the past six years. Sales of new and previously occupied homes have risen, although the increases have been choppy.
Sales of previously occupied homes fell in June to their lowest level since October. But sales 4.5% higher than a year ago, evidence that a modest recovery is still under way.
One trend holding back sales has been low inventories. There were 144,000 new homes for sale in June, just above May's 143,000 — the lowest on records dating back to 1963. At the current sales pace, it would take 4.9 months to exhaust the June supply. A six-month supply is generally considered healthy by economists.
The reduced inventory is pushing up home prices overall. The median price of a new home, however, fell 1.9% in June from May to $232,600.
"With no excess inventory of unsold new homes, any sustained recovery in new home sales should quickly translate into firmer prices," Steven Wood, chief economist at Insight Economics, said.
Low inventories are also spurring building. Builders broke ground last month on the most new homes and apartments in nearly four years. And permits to build single-family homes rose to the highest level since March 2010. Surveys also show that builders are more confident in the market, partly because they are seeing more interest from potential buyers.
However, many people are still having difficulty qualifying for home loans or can't afford the larger down payments being required by banks.
Though new homes represent less than 20% of the housing market, they have an outsize impact on the economy. Each home built creates an average of three jobs for a year and generates about $90,000 in tax revenue, according to the National Association of Home Builders.
Economists expect housing will add to economic growth this year for the first time since 2005. But home construction and remodeling have become such a small part of the economy that the increase will likely have only a modest impact.
Other than housing, the economy has been weakening. Americans have cut spending at retail stores for three straight months, the longest stretch of cutbacks since the recession. A survey earlier this month found that manufacturing activity contracted in June for the first time in nearly three years.
And hiring is slowing. Employers added an average of only 75,000 jobs a month from April through June. That's much lower than the average of 226,000 a month added in the first three months of this year.
On Friday, the government will issue its first estimate for economic growth in the April-June quarter. Economists have cut their forecasts in recent weeks, and now expect growth at an annual rate of only 1.5%. That's below the 1.9% pace in the first three months of the year.
By Christopher S. Rugaber, Associated Press Jul 25, 2012
New home sales fall to 5-month low in June – USATODAY.com
Reuters: Business News
National Commercial Real Estate News From CoStar Group
Latest stock market news from Wall Street - CNNMoney.com
- ► 2017 (76)
- ► 2016 (145)
- ► 2015 (146)
- ► 2014 (102)
- ► 2013 (395)
- Last days of the Borgata
- LifeLock reveals finances pre-IPO
- Home prices rose in July in 20 major US cities
- Radar Logic: Home Prices Hit Peak in July, Distres...
- 34,000 in Ariz. get mortgage aid
- Phoenix-based Vestar buys Calif. retail center for...
- Phoenix-area rental homes a red-hot commodity
- Home-related sales through the roof
- New US home sales edged down 0.3% in August
- Attorney General sets 3-year foreclosure plan for ...
- Top 10 things to know about Social Security
- Understanding Social Security benefits
- Maricopa County homeowners likely to see property-...
- Reagor: Building of homes slows a bit
- At 40, McCormick Ranch still desirable place to li...
- Fountain Hills mulls giving new life to avenue
- Peoria entertainment/hotel plan closer to reality
- Residential lot coverage debated in Arcadia
- Arizonans may not feel closure of local banks
- Proposed Scottsdale condo plan gains height, densi...
- Luxury retirement facility's sales rise
- Audit: Maricopa County housing-agency woes continu...
- Foreclosure starts fell on annual basis in August ...
- Housing prices up in most NE Valley communities
- Housing key part of SkySong's 'secret sauce'
- Valley in top 10 in US for foreign investors
- New tax on home sales is overblown rumor
- Home construction on uptick in Scottsdale
- Building set for approval - USATODAY.com
- Furnishings firm takes over ex-nightclub site
- The market: Views from the trenches
- City closer to Waterfront apartment-plan OK
- Scottsdale council approves permits for downtown b...
- Metro Phoenix a seller's (and landlord's) market
- Scottsdale home prices up 9.26 percent over a year...
- Valley bankruptcies keep plummeting
- IRS pays Swiss ex-banker, whistleblower $104 milli...
- Baby Boomers have many options for retirement plan...
- Proposed condo plan gains height, density
- Cottonwoods considers adding assisted living
- Scottsdale council approves contentious Echo at Wi...
- Phoenix-area home-price dip called a 'natural reac...
- City Planning Commission draws criticism
- US Home Prices Rise in July by Most in 6 Years - D...
- 2 large Phoenix warehouses being built
- City expands affordable housing - USATODAY.com
- Entertainment hub progresses - USATODAY.com
- City hopes Chandler site will be revitalized - USA...
- PV commission member resigns over resort redevelop...
- Top 5 lenders: $500M spent in Ariz. - USATODAY.com...
- 6,900 Scottsdale apartments in pipeline
- Home prices notch first 12-month gain since 2010 -...
- Advice for Arizonans on brink of foreclosure
- New-home sales rise to match 2-year high - CBS New...
- Beach-club complex votes on permits, licenses are ...
- US home sales rose 2.3 percent, sign of recovery
- Toll Brothers Posts Strong Growth - WSJ.com
- A challenge to finish preserve - USATODAY.com
- Valley agent did well by focusing on SHORT SALES -...
- New Mountain Shadows resort plan consolidates buil...
- ARMLS buys researcher
- Mesa senior-living complex will be based on Tempe ...
- Home prices up in 5 areas - USATODAY.com
- Newest numbers don't cast 'shadow'
- Run-up in home prices slows - USATODAY.com
- Fannie Mae posts $2.2B net gain for Q2 - Yahoo! Fi...
- Land purchase for theater expected to finalized so...
- ASU's SkySong will add residential space
- Reagor: New-home market projections promising
- 6 Phoenix-area apartment communities sold
- Fannie and Freddie principal cuts barred - USATODA...
- Phoenix expedites building process
- Plan for luxury homes at resort stirs controversy
- Mystery bidder gets 275 homes - USATODAY.com
- Meritage earnings rise - USATODAY.com
- Mesa minister gets maximum sentence in fraud
- Split up banks, says builder of Citigroup - USATOD...
- New home sales fall to 5-month low in June – USATO...
- GOP rips Geithner about LIBOR - USATODAY.com
- Historic homes at risk after they're foreclosed
- 100 more lots sold in project - USATODAY.com
- 4333 Building plan still viable, extension sought
- Census estimates: Phoenix remains sixth-largest ci...
- SIGNS OF HEALTH - USATODAY.com
- Subdivision is proposed - USATODAY.com
- Reagor: Home-listing group game for some fun
- After 6 years, Scottsdale is settling state-land c...
- Foreclosure Crisis Hits Older Americans Hard - US ...
- Government program to help avoid foreclosure
- Property-tax bills may rise in Paradise Valley sch...
- Construction, housing sectors face challenges
- ▼ September (91)
- ► 2011 (704)