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June New Home Sales Plunge to Five-Month Low

New home sales fell to 350,000, setting a five-month low in June, the ""Census Bureau"":http://www.census.gov/ and ""HUD"":http://portal.hud.gov/hudportal/HUD reported jointly Wednesday.

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Economists had expected sales to inch up slightly from the preliminary sales report in May. May sales were revised up to 382,000 from the originally reported 369,000.

Both the average and median price of a new home fell in June from May. The median price was also down from June 2011 while the average price was up slightly.

The report is another disappointment for the housing sector, which had seen some encouraging signs in recent data on builder confidence and housing starts.

The 8.4 percent month-over-month drop in sales was the steepest since sales fell 11.4 percent from January to February 2011.

June 2012 sales though were up 15.1 percent from June 2011, the ninth straight month of year-over-year increases.

The median price of a new single-family home fell to $232,600, for the third decline in the last four months and the steepest, 1.9 percent, since last November.

The median price was also off 3.2 percent from 12 months earlier, the first year-over-year drop since January.

The average price of a new home fell in June to $273,900, a drop of 1.5 percent, the second straight month-over-month dip. The average price is up $800 or 0.3 percent from June 2011.

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The June new home sales drop comes on the heels of last week's report from the ""National Association of Realtors"":http://www.realtor.org/ that existing home sales fell in June to an eight month low, falling for the fourth time in five months.

The month-over-month drop in new home sales in June was only the second in the last 10 months. The two reports are not strictly comparable since the new home sales data is based on contracts and the existing home sales report tracks completed (closed) transactions.

Nonetheless, the two reports are often read together to measure the strength of the housing sector.

The new home sales report is a more current indicator of housing conditions since it reflects the economy and consumer confidence for the month of the report. It does not though take into account transactions which are cancelled.

In June, according to the ""National Association of Home Builders'"":http://www.nahb.com/ monthly survey, the buyer traffic index ├â┬ó├óÔÇÜ┬¼├óÔé¼┼ô visitors to model homes and builder showrooms ├â┬ó├óÔÇÜ┬¼├óÔé¼┼ô remained flat at the May reading of 23. The index rose in to 23 (out of 100) in May from 18 in April.

According to a separate report from last week, builders completed 470,000 new single-family homes in June, up from 464,000 in May, and more than reported sales in June.

The inventory of new homes for sale at the end of June was 144,000, according to the sales report, up from 143,000 in May, a 4.9 month supply ├â┬ó├óÔÇÜ┬¼├óÔé¼┼ô up from 4.5 months ├â┬ó├óÔÇÜ┬¼├óÔé¼┼ô based on the lower sales rate.

About 29 percent of new homes sold in June carried prices of $200,000 or more, down from 30 percent in May.

Sales dropped sharply month-over-month in the Northeast, down 60 percent from May and fell 8.6 percent in the South while increasing 14.6 percent in the Midwest and 2.1 percent in the West.

Year-over year, sales were flat in the Northeast while increasing 36.1 percent in the West, 19.6 percent in the Midwest and 6.5 percent in the South.

About Author: Mark Lieberman

Mark Lieberman is the former Senior Economist at Fox Business Network. He is now Managing Director and Senior Economist at Economics Analytics Research. He can be heard each Friday on The Morning Briefing on POTUS on Sirius-XM Radio 124.
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