U.S. New-Home Sales Fall to Nine-Month Low While Supply Rises
(Bloomberg) -- U.S. purchases of new homes unexpectedly dipped to the weakest pace in nine months as higher prices and mortgage rates sideline demand, adding to signs of a cooling in the housing market, government data showed Thursday.
Highlights of New-Home Sales (July)
The first back-to-back decline since January was led by a 52.3 percent drop in the Northeast to 21,000 home sales, the fewest since 2015, as well as a 3.3 percent decline to 355,000 in the South, the biggest region. The West and Midwest recorded gains.
The figures follow data Wednesday showing sales of previously- owned homes fell for a fourth month to the lowest since early 2016. A separate report on Thursday showed home prices rose 1.1 percent in the second quarter from the previous three months, the smallest gain in four years, according to the Federal Housing Finance Agency.
The S&P Supercomposite Homebuilding Index fell as much as 1.6 percent as of 11 a.m. in New York, with all 15 index members declining. The gauge has retreated 16 percent this year as the broader S&P 500 reached an intraday record this week.
At the same time, a robust job market and higher take-home pay following tax cuts should keep demand for new homes stable. The number of properties sold but not yet under construction rose to 212,000, the highest since November, a sign builders will stay busy in coming months. In addition, 65,000 homes were for sale but not yet started, the most since 2008.
New-home sales, tabulated when contracts get signed, account for about 10 percent of the market. While volatile, they’re considered a timelier barometer than purchases of previously owned homes, which are calculated when contracts close and are reported by the National Association of Realtors.
What Our Economists SayToday’s housing results could escalate Fed concerns about the sector, which were highlighted in the minutes from the July 31-Aug. 1 FOMC meeting. Housing popped up for the first time in a while as a potential downside risk. Peak home-buying season for the year is well behind us. While purchases typically fall in July, this year’s decline was steeper than average.
-- Yelena Shulyatyeva and Carl Riccadonna, Bloomberg Economics
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