The numbers: Sales of newly built homes in the U.S. fell in June, as demand cooled after a jump the previous month.
U.S. new-home sales fell 2.5% to an annual rate of 697,000 in June, from a revised 715,000 in the prior month, the Commerce Department reported Wednesday.
The number is seasonally adjusted and refers to how many homes would be built over an entire year if builders continued at the same pace every month.
Sales fell further than what Wall Street was expecting. Economists had forecast new-home sales to total 725,000 in June.
The fall in home sales was led by a sharp drop in the Midwest.
Overall, new-home sales have been higher because home builders are among the few players offering inventory for home buyers.
The data from May was revised significantly. New-home sales were a revised 715,000 in May, compared with the initial estimate of a 12.2% increase to 763,000.
The new-home sales data are volatile month over month and are often revised.
Key details: The median sales price of a new home sold in June fell to $415,400, from $416,300 the month before.
New homes have become cheaper over the past few months, getting closer to the median price of an existing home. In June, the median price of an existing home was $410,200, according to the National Association of Realtors.
The supply of new homes for sale fell 2.8% between May and June, equating to a 7.4-month supply.
Regionally, the Northeast led the nation in new-home sales, posting an increase of 21%, but the overall number was dragged down by big drops in the Midwest and West.
Overall, sales of new homes are up 24% compared with last year.
Big picture: New-home sales have softened after a stellar increase the previous month.
A lack of previously owned homes for sale has pushed many home buyers into the new-home market, but high mortgage rates may dampen demand. The 30-year rate was averaging 7% ahead of the U.S. Federal Reserve’s meeting Wednesday morning, with the market broadly expecting another increase in the central bank’s benchmark interest rate.
To keep buyers interested despite high rates and worsening affordability, home builders are continuing to offer incentives.
What are they saying? “The May spike in new home sales mostly disappeared, and the June tally settled back modestly,” Stephen Stanley, chief U.S. economist at Santander U.S. Capital Markets, wrote in a note.
Market reaction: Stocks
were down in early trading on Wednesday. The yield on the 10-year Treasury note
fell below 3.9%. Shares of builders, including D.R. Horton Inc.
and Toll Brothers Inc.
were up in the morning trading session.