After reporting an unexpected rebound in U.S. new home sales in the previous month, the Commerce Department released a report on Tuesday showing new home sales pullback by more than expected in the month of June.
The report said new home sales plunged by 8.1 percent to an annual rate of 590,000 in June after jumping by 6.3 percent to a revised rate of 642,000 in May.
Economists had expected new home sales to tumble by 5.2 percent to an annual rate of 660,000 from the 696,000 originally reported for the previous month.
With the bigger than expected decrease, new home sales slumped to their lowest annual rate since hitting 582,000 in April 2020.
The pullback in new home sales was partly due to a steep drop in the West, where new home sales plummeted by 36.7 percent.
New home sales in the Northeast and South also tumbled by 5.3 percent and 2.0 percent, respectively, while new home sales in the Midwest skyrocketed by 42.3 percent.
The Commerce Department also said the median sales price of new houses sold in June was $402,400, down 9.5 percent from $444,500 in May but up 7.4 percent from $374,700 a year ago.
The report also showed the estimate of new houses for sale jumped 2.2 percent to 457,000 at the end of June from 447,000 at the end of May. The unsold inventory represents 9.3 months of supply at the current sales rate.
“Conditions in the market for new homes are probably weaker than the headline suggests,” said Nancy Vanden Houten, Lead U.S. Economist at Oxford Economics. “Cancellations of prior contracts to purchase homes are reportedly rising sharply and those cancellations aren’t captured in the data.”
“Our forecast is for new home sales to average just around 600k in the second half of 2022, but the June pace of sales indicates there is a downside risk to that forecast,” she added. “Further downward adjustments to prices may keep a floor under new home sales, however.”
A separate report released by the National Association of Realtors last Wednesday showed existing home sales in the U.S. tumbled by much more than expected in the month of June.
NAR said existing home sales plunged by 5.4 percent to an annual rate of 5.12 million in June after slumping by 3.4 percent to an annual rate of 5.41 million in May. Economists had expected existing home sales to decrease by 0.6 percent to a rate of 5.38 million.
Existing home sales declined for the fifth consecutive month, falling to their lowest level since June of 2020.
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