New-Home Sales Plunge in June, But Builders Still Optimistic

Adding more uncertainty to the sluggish housing market, U.S. officials reported disappointing figures for new-home sales, with a steep 8.4 percent drop in June to a seasonally adjusted annual rate of 350,000 units.
The percent decline was the largest since February 2011.
This follows the upwardly revised stronger pace of the previous month, according to figures released today by the U.S. Census Bureau.
But June also saw a decline in the sales of existing homes, creating doubts as to the stability of the housing market, which had shown signs of strengthening in earlier months.
Home builders, however, remain optimistic.
“While we would have liked to see a third consecutive month of new-home sales gains in June, the fact remains that the sales numbers are up on both a quarterly and yearly basis, while builders continue to report that they are seeing more serious buyers in the market for a newly constructed home with all of the latest updates,” said Barry Rutenberg, chairman of the National Association of Home Builders (NAHB) and a home builder from Gainesville, Fla.
NAHB Chief Economist David Crowe said the lower number of new-home sales in June represents an adjustment from a robust level of activity in May, “yet overall results for the second quarter show we are still on track for continued improvement.”
Nonetheless, there is a tight inventory of new homes for sale, posing a challenge to builders who continue to confront issues with obtaining credit for new projects, he said.
On a regional basis, new-home sales gained 14.6 percent in the Midwest and 2.1 percent in the West, but fell 8.6 percent in the South and whopping 60 percent in the Northeast in June.
Meanwhile, the inventory of new homes for sale was virtually unchanged for the month at 144,000 units, which represents a relatively slim, 4.9-month supply at the current sales pace.

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