Sales of new U.S. homes unexpectedly declined for a second month in June, indicating housing is still languishing two years into the economic recovery.
Purchases dropped 1 percent to a 312,000 annual pace, a three-month low, figures from the Commerce Department showed today in Washington. The median estimate in a Bloomberg News survey of economists called for a 320,000 rate. The median selling price of a new home rose from a year earlier, while inventories fell to the lowest on record.
Builders have little incentive to start projects as the prospect of more distressed properties entering the foreclosure pipeline depresses home values. The figures underscore Federal Reserve Chairman Ben S. Bernanke’s comments that demand for homes has been held back by slow job growth and restrained consumer optimism.
“You’re still dealing with a supply-demand imbalance that suggests home prices will remain under pressure,” Tom Porcelli, chief U.S. economist at RBC Capital Markets Corp. in New York, who forecast June sales at a 310,000 pace. “As unemployment stays high, it will be difficult to generate meaningful gains in home sales.”
Confidence among U.S. consumers unexpectedly rose in July from an eight-month low, led by a rebound in the outlook for jobs over the next six months. The Conference Board’s index climbed to 59.5 from a revised 57.6 reading in June.
Stocks held earlier losses after the reports, with the Standard & Poor’s 500 Index falling 0.4 percent to 1,332.78 at 10:16 a.m. in New York. Treasuries rose, pushing down the yield on the benchmark 10-year note to 2.98 percent from 3 percent late yesterday.
Economists’ Projections
Estimates of the 72 economists surveyed by Bloomberg ranged from annual rates of 300,000 to 342,000. Sales in May were revised down from a previously estimated 319,000 pace. Some 323,000 new dwellings were sold in 2010, the fewest on record.
Bloomberg
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http://www.bloomberg.com/news/2011-07-26/u-s-june-new-home-sales-fall-more-than-estimated-to-312-000-annual-pace.html
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