New-home sales dipped in July, the government said Monday in a disappointing monthly report that highlights ongoing problems in the housing sector.
Sales of new homes slipped 2.4 percent in July from June numbers, to an annual rate of 412,000, according to data from the Census Bureau and Department of Housing and Urban Development.
Sales dropped on a month-over-month basis in all regions of the nation except the South, which rose by 8.1 percent.
“We are somewhat surprised by this dip, considering builder confidence and new-home starts are on the rise,” said Kevin Kelly, chairman of the National Association of Home Builders and a home builder and developer from Wilmington, Del. “However, builders are increasing their level of inventory in anticipation that sales will gradually improve during the rest of the year.”
The group’s chief economist, David Crowe, remained optimistic for an uptick later this year.
“Consumer confidence continues to improve, mortgage rates are at yearly lows, and the labor market is healing,” he said. “These factors should help spur pent-up demand.”
The average price of a new home sold in July — $339,100 — was up 2.8 percent over July 2013. But the midpoint price for a new home sold in July was $269,800, a slight dip from the prior month but still up 2.9 percent over the same month of last year.
Continued low levels of first-time home buyers are weighing against new-home sales, warned Stephanie Karol, a U.S. economist for forecaster IHS Global Insight. In order for a family to sell an existing home and move up to a new home, there often needs to be that first-time buyer, she said in a research note Monday.
“When move-up demand accounts for such a vast majority of existing home sales, it implies a low rate of household formation and thus low demand for new housing stock,” Karol cautioned.