Sales of new homes increased to an annualized rate of 646,000 in June, according to the Census Bureau and the Department of Housing and Urban Development.
June’s rate was 7% higher than May’s downwardly revised rate of 604,000 and 4.5% higher than a year earlier when it was 618,000.
The median sales price of new homes was $310,400, down from $310,500 a year earlier, the report said.
The data shows weakness in the residential construction market, which represents about 12% of U.S. home sales, said TIAA Bank Executive Vice President John Pataky. A cut in the Federal Reserve's benchmark rate could help to stimulate demand, he said. The Federal Open Market Committee meets next week to discuss monetary policy, and about 78% of traders in future markets expect a quarter percentage point cut, according to CME Group.
“We’re seeing Americans generally upbeat about the economy, partly due to rising wages, lower unemployment and decreased borrowing costs,” Pataky said. “Ultimately, the market will need to strike the balance of increased construction and strong economic fundamentals to see stable progress. If the Fed cuts rates and stimulates more new home sales, then this could add to the positive momentum.”
The seasonally adjusted estimate of new homes for sale by the end of June was 338,000, representing a supply of 6.3 months at the current sales rate.
"While new home sales were up in June, they were up from a weak starting point – sales were revised lower in the previous three months, including in May, which was a five-month low,” Navy Federal Credit Union Corporate Economist Robert Frick said. “The problems continue to be supply and pricing. The median price of new homes sold in June was $310,400, and the average price was $368,600. Half of today’s buyers are looking for homes under $288,000.”
Frick said pricing will continue to be an issue for the foreseeable future, even with lower mortgage rates and growing wages.
