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BUSINESS

New-home sales fall 8.1% in June

Doug Carroll
USA TODAY
A house is under construction in May 2014 in Tisbury, Mass.

Sales of new single-family homes fell 8.1% in June, and May's previously reported surge was slashed by a record revision.

Paired with June's slippage, newly updated sales figures for March, April and May show the industry's spring performance was weaker than previously estimated, the Census Bureau reported Thursday.

June sales hit a seasonally adjusted annual rate of 406,000, the second-weakest pace of the year, Census said. May's level was cut to 442,000 from the 504,000 annual pace Census reported a month ago.

Instead of rising nearly 19% from April, May's sales were only up about 8%. The magnitude of the change was a single-month record for new-home sales data, according to Census records on revisions that date to 1996.

Economists were bracing for lower June sales, but they anticipated an annual sales rate of 480,000, based on the median forecast in Action Economics' survey.

Sales fell from May in every region, led by a 20% decline in the Northeast. The falloffs elsewhere were 1.9% in the West, 8.2% in the Midwest and 9.5% in the South.

The median price of homes sold last month was $273,500, up 5.2% from June 2013, but down 3.2% from May.

"This was a dismal report. Last month's number looked like an outlier, and turned out to have been too good to be true," said IHS Global Insight economist Stephanie Karol in a research note.

While monthly figures can be volatile, more reliable quarterly averages show the new-home market's weakness. Second-quarter sales were 6.4% below the pace in last year's second quarter, Karol points out.

Despite recent signs of a pickup in the housing market after a rough winter, the pace of its recovery this year has not quickened as economists expected despite an improving jobs market and mortgage rates that are still near historical lows.

Existing-home sales rose 2.6% in June, but are trailing last year's first half. With the revisions in Thursday's report, new-home sales are running about 5% behind a year ago.

There were some hopeful signs in the latest data, some economists say. For one, the supply of homes available for sale rose to 197,000, a three-year high.

Builders have cited a shortage of labor and desirable available lots to build on as hindrances to greater home building. With improving supplies of existing homes for sale, buyers have more options, and that may be another factor, Karol says.

"When choosing between a new house in the middle of nowhere and an existing home in a better location, buyers are likely to choose the latter," she says. "Since lending standards are easing for construction and land development credit, the scarcity of well-located, shovel-ready lots should resolve itself, but it will take some time."

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