BUSINESS
New U. S. single-family home sales unexpectedly fell in July, dropping to their lowest in seven months amid a surge in prices, raising concerns of a slowdown in the housing market recovery.
New U.S. single-family home sales unexpectedly fell in July, dropping to their lowest in seven months amid a surge in prices, raising concerns of a slowdown in the housing market recovery.
Coming on the heels of data this month showing a tumble in home building and permits in July, the weak sales pace suggests that housing could remain a drag on economic growth in the third quarter.
"The third-quarter sales data are starting out significantly below the second-quarter average, and many other housing reports have also shown some recent weakening in their respective trends," said Daniel Silver, an economist at JPMorgan in New York. "Today's report strengthens our conviction that real residential investment will decline in the third quarter."
The Commerce Department said on Wednesday new home sales declined 9.4 percent to a seasonally adjusted annual rate of 571,000 units last month, the lowest level since December 2016. The percentage drop was the largest since August 2016 and confounded economists' expectations for a 0.3 percent gain.
June's sales pace was revised up to 630,000 units from the previously reported 610,000 units. Home sales in May also were not as weak as previously reported, taking some of the sting from July's report.
New home sales, which account for 9.4 percent of overall housing sales, are volatile month-to-month and are drawn from building permits. Still, sales declined 8.9 percent on a year-on-year basis, the first annual drop since February 2016.
July's sales pace was below the second-quarter average of 613,000 units. Sales fell in the Northeast, South and West, but rose in the Midwest. In a separate report on Wednesday, the Mortgage Bankers Association said applications for loans to buy a house decreased last week to a six-month low.
A survey last month by Fannie Mae, the largest U.S. mortgage guarantor, showed a drop in the share of respondents saying now is a good time to buy a home as well as a surge in the number of those who believe this is a bad time to buy.
Housing subtracted nearly three-tenths of a percentage point from gross domestic product in the second quarter.
SUPPLY SQUEEZE
U.S. financial markets were little moved by the data as investors worried over comments by President Donald Trump threatening a government shutdown to secure funding for a border wall with Mexico, raising the specter of a tough budget battle.
Trump also said late on Tuesday he might terminate the NAFTA trade treaty with Mexico and Canada after three-way talks failed to bridge deep differences.
The PHLX index of housing stocks fell in line with a broadly weaker U.S. stock market. Shares in the nation's largest homebuilder, D.R. Horton, slipped 0.22 percent and Lennar Corp fell 0.28 percent.
Pultegroup stock declined 0.43 percent. The dollar was trading lower against a basket of currencies, while prices for U.S. Treasuries rose.
Despite the drop in new home sales, the housing market remains underpinned by a strong labor market, which is near full employment. But it is being hampered by a shortage of homes, which is driving up prices.
Contributing to the dearth of homes on the market, some homeowners are remodeling their houses rather than trading up.
Those renovations are boosting business for home improvement retailers like Lowe's Companies, which on Wednesday reported a 6.8 percent increase in net sales in the quarter ended Aug. 4.
The median price of a new home increased 6.3 percent in July from a year ago to $313,700. In contrast, annual wage growth has struggled to break above 2.5 percent.
Despite the acute housing shortage, builders are struggling to fill the void, citing supply constraints, including labor, land and finance. Last month, 70 percent of the new single family homes sold were either yet to be built or under construction in July.
"New home sales are still concentrated in the higher end of the market," said Matthew Pointon, an economist at Capital Economics in New York. "Until builders switch their efforts to cheaper starter homes that will limit to degree to which sales can grow."
The inventory of new homes on the market rose 1.5 percent to 276,000 units last month, the highest level since June 2009. Still, new housing stock is less than half of what it was at its zenith during the housing bubble.
At July's sales pace it would take 5.8 months to clear the supply of houses on the market, almost a two-year high and up from 5.2 months in June.
(This article has not been edited by DNA's editorial team and is auto-generated from an agency feed.)
Darshan case: Karnataka HC reserves order on jailed actor's bail plea
DNA TV Show: Congress’ fresh allegations against SEBI chief Madhabi Puri Buch
Mukesh Ambani acquires another company after 3 years, it manufactures...
Hyderabad: Visually challenged couple lives unaware with son's body for 4 days
Noel Tata makes first major appearance since Ratan Tata's demise, seen at...
J-K: Light snowfall in higher reaches of Kashmir, IMD predicts cloudy weather for...
WATCH: Son gets Rs 3 lakh porn movie offer, his mom's reaction goes viral
Bigg Boss 18: Vivian Dsena's wife Nouran Aly gives stern warning to Karan Veer Mehra, says don't...
Bollywood’s biggest flop sold only 500 tickets, made at Rs 45 cr, it earned only…, it starred…
7th Pay Commission: Diwali GIFT for govt employees of this state, DA hiked by...
Instagram down: Users face issues while sending messages, say, 'Rehne do fir'
Bigg Boss 18: Nyrraa Banerji opens up on her 'love angle' with Shehzada Dhami, says 'both of us...'
Ahead of Diwali, Akshay Kumar donates Rs 10000000 in Ayodhya for...
Dhanteras 2024 Shubh Muhurat: Puja timings, vidhi and what to buy
Mukesh Ambani's company gets RBI approval, set to operate as an online...
Who is the richest kid of Mukesh Ambani and Nita Ambani? Is it Akash, Isha or Anant? Know here
Watch: Amazon Alexa launches Diwali rocket, viral video stuns internet
Dimple Kapadia reacts to being social media savvy like Zeenat Aman: 'If I’ll ever be....'
Amid affair rumours with Abhishek Bachchan, Nimrat Kaur requests everyone to...
Rising Trends In Fertility Due To Environmental Pollution
Andrew Spira's New Book: A Guide To Entrepreneurial Resilience
What Makes Furniture Truly Cosy?
Delhi NCR news: Delhi Police, NCB bust meth lab in Noida, 5 arrested
Good news for Gautam Adani on Dhanteras 2024, his flagship company's profit jumps to Rs...
IND vs NZ: Star bowler called up to India’s squad for 3rd Test, likely to make debut in Mumbai
Meet woman, who cracked UPSC exam on her first attempt at age 23, to become...
Amid Aishwarya Rai-Abhishek Bachchan divorce rumours, know what 'grey divorce' means
IND vs NZ: India’s another landmark record at stake in Mumbai Test vs New Zealand
Who is Sheikh Naim Qassem, the new chief of Lebanon's Hezbollah?
PM Modi launches health cover for senior citizens; know eligibility, how to apply here
Chhoti Diwali 2024: Know significance of celebration, shubh muhurat, rituals and more
College student jumps from 4th floor of hostel thinking he had...
'Not Saint, Sadhu or...': Jaya Kishori hits back at trolls slamming her for Dior bag
Aishwarya Rai’s remark on divorce plans with Abhishek Bachchan goes viral: ‘We don’t even…’
Sunita Williams sends Diwali wishes from space, here's what she said; watch
Diwali 2024 long weekend: Banks to remain closed for four days in THESE states, full list here
'Monopoly Bachao Syndicate': LoP Rahul Gandhi alleges 'nexus' among Adani Group, BJP and...
Good news for Indians, Russia to offer visa-free travel by...
Big trouble for Gautam Adani, SEBI slaps show-cause notice to Adani Power, shares price fall by...
Two killed, several injured in Metro construction site accident in Patna, probe underway
Mukesh Ambani's BIG Diwali gift, JioFinance app will now let you buy gold for just Rs...
Mukesh Ambani's JioSaavn's festive offer: 3-month subscription for just Rs...
Baba Siddique's son Zeeshan Siddique gets threat message; accused held from Noida
J-K attack: Army dog 'Phantom' dies in anti-terror operation, honoured for sacrifice
Glenn Maxwell reveals Virat Kohli blocked him on Instagram after...
Mukesh Ambani's Diwali gift to Reliance employees is a box of..., watch viral video
Fashion designer Ratul Sood passes away playing golf in Kolkata
UP govt announces big gift ahead of Diwali, all employees of THIS department to be made permanent
How can AI, ML skills help sharpen problem-solving abilities in children?
Kerala: Over 150 injured, 8 critical, in fireworks accident during temple festival
Ratan Tata's Rs 10,000 crore Will: Who gets what? Here's all the details
Delhi-NCR AQI today: Delhi air quality remains 'very poor' ahead of Diwali despite firecracker ban
Ex-Pakistani cricketer takes brutal dig at Rohit Sharma, calls India 'Kagaz se sher aur...'
Is stock market open or closed on Dhanteras? Know details here
Kunal Kamra accepts Bhavish Aggarwal's 'join Ola' offer, has THESE demands
Education ALERT: Avoid these courses at all costs, no job guarantees
Salman Khan can’t take his eyes off Aishwarya Rai in viral video, fans say ‘inki shaadi hoti toh…’
Ahead of Diwali and Chhath Puja, Railways to run 250 special trains from today: Check full list
Israel passes law banning UNRWA operations in country: What does that mean?
Happy Dhanteras 2024: Wishes, WhatsApp messages, quotes, greetings to share with your loved ones
Delhi traffic advisory issued for ‘Run For Unity’ today, check list of routes to avoid here
Amazon Great Indian Festival Sale 2024 ends today, don't miss these fantastic deals