The numbers: New-home sales rebounded in June, the first gain in three months, government data released Wednesday show. The annual sales pace for new single-family homes in the U.S. rose 7% last month to 646,000, led by a big gain in sales in the West, the Commerce Department said.
Economists polled by MarketWatch had expected a June sales rate of 657,000, compared with an original May estimate of 626,000. On Wednesday, the government revised May’s rate to 604,000.
What happened: New-home sales were rising steadily but peaked at 693,000 in March.
Sales remain 4.5% higher than a year ago in June. Over the past year, sales have been strong in the South and West and weaker in the Northeast and South.
In the year-to-date, sales are 2.2% higher than the same period a year ago.
The median sales prices in June, $310,400, was only slightly lower than a year ago. The changes in tax policy has reduced the attractiveness of Homeownership, economists said.
At the current pace of sales, it would take 6.3 months to exhaust available supply, slightly above the 6 months’ supply that’s traditionally been considered the market of an evenly balanced market.
Big picture: Economists were expecting new-home sales to pick up in June as mortgage rates fell last month in anticipation of Federal Reserve easing. Sales are not expected to rocket higher going forward given the slowing economy and high prices.
What are they saying? “Whether we are seeing a topping out or inflection point for new home sales is uncertain. Much will depend on labor market conditions and the ensuing confidence, or lack thereof, that will help shape decisions about whether or not to make the huge leap of purchasing a new home. For the moment, at least, the current level of starts of single family homes is supported by final demand,” said Josh Shapiro, chief economist at MFR Inc.
Market reaction: Stocks were lower in morning trading. The Dow Jones Industrial Average DJIA, +0.09% was recently off 132 points, about where it started the session.