US new home sales rise in June but prior months revised lower
Sales of newly built homes in the US rebounded in June, rising by the most in five months, but downward revisions to previous months highlighted sluggishness in the housing sector during the key spring selling season.
New home sales climbed 7 per cent month-on-month in June to an annualised pace of 646,000 units, the Census Bureau said on Wednesday.
While that exceeded economists’ expectations for a 6 per cent rise, it was short of their forecasts for an annual level of 660,000 units as the previous month’s figures were revised lower to reflect an 8.2 per cent decline in May. March and April’s figures were revised lower as well.
A regional breakdown showed home sales surged in the west and were little changed in the south but fell sharply in the north-east and declined in the midwest as well.
While lower mortgage rates and improving incomes have helped support the housing market, a shortage of labour and lots are driving upward pressure on prices that are ultimately outstripping wage increases.
Wednesday’s report showed the median sales price of new houses rose 2.3 per cent from the previous month to $310,400 in June.
“Whether we are seeing a topping out or inflection point for new home sales is uncertain,” said Joshua Shapiro, economist at MFR. “Much will depend on labour market conditions and the ensuing confidence, or lack thereof, that will help shape decisions about whether or not to make the huge leap of purchasing a new home.”
It is worth noting that newly built homes account for a much smaller slice of the housing market than previously owned homes. Data on Tuesday showed existing home sales fell 1.7 per cent and sales in this section of the market have lost momentum since March.
The lack of momentum during the key spring selling season has raised some concerns about the health of the housing market and highlighted the need for more housing stock.