New home sales fell 6.6 percent in June, lowest in over a year

Sales of new homes fell for a third straight month in June, dropping by 6.6 percent to the lowest level in more than a year.

The June sales decline left sales at a seasonally adjusted annual rate of 676,000, the Commerce Department reported Monday. That followed a 7.7 percent sales decline in May and a 10.1 percent fall in April.

The pace last month was down 19.4 percent from a year ago and the slowest since April 2020. Housing has been a standout performer since the economy began emerging from the steep but short pandemic recession in April last year.

The median price of a new home sold in May was $361,800, up 6.1 percent from a year ago but down 5 percent from May, suggesting the surge in prices may be slowing a bit as builders increase inventories. The number of new homes for sale at the end of June increased to 353,000, up 7 percent from May.

A shortage of homes on the market and rising costs for material such as lumber and also higher labor costs had fueled a sharp jump in prices. But analysts said the trend for sales and price gains has clearly slowed from the red-hot pace seen over the past year as the economy emerged from the pandemic.

Rubeela Farooqi, chief US economist at High Frequency Economics, noted that new home sales averaged 728,000 at an annual rate in the April-June quarter, down sharply from a monthly average of 926,000 in the fourth quarter of last year.

“The trend has clearly slowed,” she said. “Prices remain above pre-recession levels and are likely a factor weighing on demand for new homes.”

By region of the country, sales of new homes rose 5.7 percent in the Midwest in June but declined in the other three regions. Sales fell 27.9 percent in the Northeast and were down 7.8 percent in the South and 5.1 percent in the West.

The report on new homes followed news last week that sales of existing homes rose 1.4 percent in June to a seasonally adjusted annual rate of 5.86 million units with the median price of an existing home hitting a record high of $363,300, up 23.4 percent from a year ago.