US new home sales drop to eight-month low in June

Sales of new US single-family homes fell to an eight-month low in June, according to figures released by the Commerce Department on Wednesday.

New home sales fell 5.3% from May's revised level to a seasonally-adjusted annual rate of 631,000. Economists had been expecting a level of 670,000. Compared to June 2017's rate of 666,000, sales were 2.4% higher.

Meanwhile, the median price of a new home was $302,100, down from $309,700 in May and the average sales price slipped to 363,300 from $365,100 the month before.

New home sales in the Northeast bucked the trend, rising 36.8%, while sales in the South, Midwest and West all declined.

Ian Shepherdson, chief economist at Pantheon Macroeconomics, pointed out that the net revision was 27,000 lower, so overall the numbers are "a good deal weaker than expected".

"That said, the monthly new home sales numbers are hopelessly unreliable - the Commerce Department says June sales fell 5.3%, plus or minus 17.1% - so it's entirely possible that sales actually rose last month, or fell much more sharply than the headline number.

"In short, the trend is what counts, not the monthly data, and the trend has been about flat since last fall, tracking the mortgage applications numbers with a lag of about three months. The message from the mortgage data now is that sales will remain broadly steady through the early fall, at least. We'd be surprised to see a sustained pick-up thereafter, given higher mortgage rates and tightening lending standards for conventional loans. Prices continue to trend higher, but the rate of increase has faltered a bit in recent months and inventory in absolute terms now stands at a nine-year high, and rising."