Sales of newly built, single-family homes fell 2.4 percent to a seasonally adjusted annual rate of 412,000 units in July, according to newly released data by the U.S. Department of Housing and Urban Development and the U.S. Census Bureau. Sales numbers for June were revised up 16,000 to 422,000.
"We are somewhat surprised by this dip, considering builder confidence and new-home starts are on the rise," said Kevin Kelly, chairman of the National Association of Home Builders (NAHB) and a home builder and developer from Wilmington, Del. "However, builders are increasing their level of inventory in anticipation that sales will gradually improve during the rest of the year."
"Though new-home sales is a volatile metric that can fluctuate significantly from month to month, the economic fundamentals are in place for an ongoing housing recovery," said NAHB Chief Economist David Crowe. "Consumer confidence continues to improve, mortgage rates are at yearly lows, and the labor market is healing. These factors should help spur pent-up demand."
Regionally, new-home sales fell 30.8 percent in the Northeast, 8.8 percent in the Midwest, and 15.2 percent in the West. Sales were up 8.1 percent in the South, the country's largest region.
The inventory of new homes for sale increased to 205,000 units in July. This is a six-month supply at the current sales pace.
“After strong housing starts and existing home sales numbers, the disappointing New Home Sales report puts a damper on this positive month for the housing market," said Quicken Loans Vice President Bill Banfield. "The silver lining appears to be the increase in home inventory, which has consistently held the market back.”