New U.S. single-family home sales fell in June to their lowest level in seven months and May's sales were revised sharply lower, in what appeared to be a minor setback for the housing market recovery.
New U.S. single-family home sales fell in June to their lowest level in seven months and May’s sales were revised sharply lower, in what appeared to be a minor setback for the housing market recovery.
Other data on Friday showed manufacturing activity nudged up in July after slowing for three straight months.
New home sales dropped 6.8 percent to a seasonally adjusted annual rate of 482,000 units, the lowest level since last November, the Commerce Department said. May’s sales pace was revised down to 517,000 units from the previously reported 546,000 units.
“You never want to see the data regress, but we remain optimistic that we’re still on a long-term upward trajectory,” said Tom Wind, vice president of home lending at EverBank in Jacksonville, Florida.
Economists had forecast new home sales, which account for 8.1 percent of the market, to be unchanged last month. Sales were up 18.1 percent compared to June of last year.
Prices for U.S. government debt rose after the data and the dollar pared gains against a basket of currencies. U.S. stock indexes were trading lower.
Despite two straight months of declines in new home sales, the overall housing market recovery remains intact.
Housing is being supported by a tightening labor market, which has unleashed demand from young adults. Steps by the government to ease lending conditions for first-time buyers through mortgage finance firms Fannie Mae and Freddie Mac also are helping.
A report on Wednesday showed home resales jumped to a more than eight-year high in June. Data last week showed building permits near an eight-year peak in June and housing starts increasing solidly.
New home sales increased 28 percent in the Northeast after soaring 78.6 percent in May. Sales fell 17 percent in the West and were down 11.1 percent in the Midwest. In the South, sales slipped 4.1 percent.
The stock of new houses for sale increased 3.4 percent to 215,000 last month, the highest since May 2010. Supply remains less than half of what it was at the height of the housing boom and is not keeping up with rising household formation.
At June’s sales pace it would take 5.4 months to clear the supply of houses on the market, the most since last November. That was up from 4.8 months in May. The median price of a new home fell 1.8 percent from a year ago to $281,800.
In a separate report, financial data firm Markit said its preliminary U.S. Manufacturing Purchasing Managers’ Index rose to 53.8 in July from a reading of 53.6 in June, which was the slowest pace since October 2013.
A reading above 50 indicates expansion in the sector. Job creation, however, slowed in July with the index at 53.7, its weakest level since April, compared with the final June reading of 55.5, Markit said.
The index’s flash output component rose to 55.4 from the final June reading of 53.9. The June final output level was the lowest since January 2014, according to Markit data.