U.S. New-Home Sales Miss Estimates After Big Upward Revision

(Bloomberg) --

Sales of new U.S. homes fell in July, missing estimates, after an upward revision to the prior month brought those sales to the highest level since 2007, a sign that lower borrowing costs may be helping stabilize purchases.

Single-family home sales fell 12.8% to a 635,000 annualized pace, while the June tally was revised up to 728,000 from a previously reported 646,000, government data showed Friday. The median sales price decreased 4.5% from a year earlier to $312,800.

Key Insights

• The reading, along with the revision that brought the June total to a level not seen since before the housing bust, signals that lower borrowing costs may be luring more buyers than thought into the real estate market. The average contract rate on a 30-year fixed mortgage has declined to 3.9%, the lowest since late 2016, according to the Mortgage Bankers Association, after the Federal Reserve cut interest rates in July.
• The figures follow recent data suggesting positive momentum in the housing market. Existing-home sales, which make up about 90% of transactions, rose to a five-month high in July. The latest housing starts data showed construction of single-family homes increased to the highest level since January, while building permits also increased.
• The supply of homes at the current sales rate increased to 6.4 months from 5.5 months in June. The number of new homes for sale at the end of the month edged up to 337,000 from 333,000.
• The number of properties sold for which construction hadn’t yet started contracted to 199,000 from 219,000.

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• Purchases of new homes decreased in the Midwest, South and West while jumping 50% to 39,000 in the Northeast.
• Economists in Bloomberg’s survey projected a pick-up to a 647,000 pace, with forecasts ranging from 609,000 to 685,000.
• New-home purchases account for about 10% of the market and are calculated when contracts are signed. They are considered a timelier barometer than purchases of previously-owned homes, which are calculated when contracts close.
• The report is published jointly by the Census Bureau and Department of Housing and Urban Development.

--With assistance from Jordan Yadoo.

To contact the reporter on this story: Reade Pickert in Washington at epickert@bloomberg.net

To contact the editors responsible for this story: Scott Lanman at slanman@bloomberg.net, Jeff Kearns

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