New home sales fell dramatically in June and the prior month’s data was revised to show less robust growth, suggesting a weak housing market.
The Commerce Department said on Thursday that single-family sales dropped 8.1 percent, the largest decline since July 2013, to a seasonally adjusted annual rate of 406,000 units. New home sales in May were revised to show a 442,000 unit pace, down from the previously reported 504,000 units.
Economists polled by Reuters had forecast new home sales at a 479,000-unit pace last month. If the sales data are compared to June of last year, then sales were down 11.5 percent.
U.S. housing starts and building permits also unexpectedly fell for the month of June, further suggesting the housing market recovery is struggling to get back on track after stalling in late 2013. Many economists attempted to blame the weak housing market on unusually cold weather since February’s weak report was released, but that excuse simple will not do in the middle of the summer.
A run-up in mortgage rates, as well as a shortage of properties for sale, resulted in a weak housing market that undercut economic growth.
Last month, new home sales fell in all four regions, declining by a whopping 20 percent in the once-robust Northeast region.
At June’s sales pace it would take 5.8 months to clear the supply of houses on the market, the highest since October 2011. The inventory of new houses on the market rose 3.1 percent to 197,000 units, which was the highest number since October 2010.