Washington, August 25--The pace of new home sales tumbled for the second straight month in July, dropping by a larger-than-anticipated 6.4% -- the first signs of a slowdown that economists have predicted for the last two years.
The Commerce Department also revised on Wednesday its sales estimates downward for the previous three months. New single-family home sales fell 6.4% to a seasonally adjusted annual rate of 1.134 million in July and declined by 5.6% in June to a rate of 1.211 million.
May's new home sales were also revised to reflect a smaller increase of 9.1% to a 1.283 million annual rate. Commerce officials had previously estimated June at a drop of 0.8% to an annual rate of 1.325 million and an 11.7% increase in May to an annual rate of 1.337. April's sales estimates were also revised lower to an annual rate of 1.176 million from 1.92 million.
Economists polled by Dow Jones Newswires and CNBC expected a modest decline of 2.3% in new home sales for July to an annual rate of 1.295 million. The National Association of Realtors reported Tuesday that home resales also cooled in July, dropping 2.9% to a 6.72 million annual rate.
Home mortgage rates rose sharply in May and June, which could account for a slowdown. But they have settled well below 6.0% in recent weeks to an average of 5.81% last week, according to a survey compiled by Freddie Mac. The average interest rate for a 30-year fixed-rate mortgage hovered around 6.0% for most of July, compared to an average of 6.29% in June and 6.27% in May, according to Freddie Mac.
Demand for new homes was down in all U.S. regions except the Midwest where new home sales surged 21.5%. Sales plunged 23.5% in the Northeast, 15.9% in the South and 1.7% in the West.
The inventory of homes on the market also rose with the softening demand to a 4.2 months supply. June's inventory of new homes available for sale was revised from a record-low supply of 3.4 months to 3.8 months. May's inventory was also revised up from 3.4 months to 3.6 months.
Average and median home prices fluctuated last month with median prices dropping to $207,400 from $212,900 in June and the average price of a new home rising to $274,200 from $262,500.
An estimated 100,000 homes were actually sold in July, down from 107,000 in June, based on figures not seasonally adjusted.
