New Home Sales Slide 8.1 Percent
The US Commerce Department reported this week that sales of new homes fell dramatically in June fueling concern that the housing recovery is losing steam. Making matters worse, the agency also revised its estimates for May sales, marking the biggest downward revision for a single month’s total since the current system began in 1996. Home sales, which collapsed during the recession, had been improving since the end of the downturn until mortgage rates began climbing last summer. Since then, a combination of rising rates and home prices and weak income growth has held any improvement in check. This year’s spring selling season, normally the best time of the year for home sales, was disappointing because of extreme winter conditions that kept many potential home buyers from shopping. Last month’s report was seen as an indication that the summer may make up for the weak spring season, but this week’s revision casted doubt on that hope.
According to the Commerce Dept. report, new homes sold at a seasonally adjusted annual pace of 406,000 last month, well below the norm, even for summer. May’s pace, meanwhile, was revised down from an initially reported pace of 504,000 to a 442,000-unit clip. The decline was felt in all four major regions of the nation, especially the Northeast, where sales plummeted 20 percent. Sales also slipped 9.5 percent in the South and 8.2 percent in the Midwest, but only fell by 1.9 percent in the West.