I hope no one thinks this is OT since its this news that is providing us with the small rally today...lower home sales and some of the other eco. data out this week may keep the feds from raising rates later this month.
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June New Home Sales Lowest in 2 1/2 Years
Sales of Single-Family Homes Fall 3.7 Percent
from Bloomberg News
WASHINGTON (Aug. 2) -- Sales of new single-family homes fell in June to the lowest level in 2 1/2 years, suggesting a series of interest-rate increases by the Federal Reserve is damping buyer enthusiasm, government figures showed.
Sales fell 3.7 percent last month to a seasonally adjusted annual rate of 829,000 units after falling to a revised 861,000 units in May, the Commerce Department said. The June sales pace was the slowest since 793,000 units at an annual rate in December 1997.
June's decline was the third in a row. The supply of new homes for sale climbed to 4.9 months from 4.6 months for the highest level since 5 months in December 1996.
``The best times for the housing market have passed,'' said Tim Rogers, an economist at Briefing.com in Boston, before the report. Analysts had called for June new home sales to remain at May's 875,000 unit at an annual pace.
New home sales are on track to finish the year at 885,000, compared with the previous records of 907,000 in 1999 and 886,000 in 1998.
Housing has slowed following six Federal Reserve interest-rate increases since June of last year. The housing industry is among the most sensitive to higher interest rates, which push up mortgage rates and make it more expensive to finance the purchase of a home.
Mortgage Rates Climb
The average rate on a 30-year fixed-rate mortgage in June was 8.23 percent, according to Freddie Mac, the No. 2 purchaser of U.S. mortgages. While down from the recent peak of 8.64 percent in mid-May, rates had averaged 7.55 percent in June 1999. One-year adjustable rates breached 7 percent in June before reaching 7.32 percent in mid-July, the highest since 1991.
Mortgage applications fell 2.3 percent last week, the second straight decline, the Mortgage Bankers Association of America reported earlier today.
Slow sales pushed the median price of a new home down 1.4 percent to $159,000 in June from $161,200 in May. The June price was the lowest since $154,900 in August 1999.
By region, sales decreased 1.5 percent in the Northeast to 67,000 at a seasonally adjusted annual rate, 7 percent in the Midwest to 133,000, and 5.1 percent in the South to 408,000. Sales rose 0.5 percent in the West to 220,000 units at a seasonally adjusted annual rate.
A slowdown in demand for new homes was already reflected in a report showing a decline in residential construction spending. Residential construction spending fell 1.4 percent in June after falling 0.2 percent in May, the Commerce Department reported yesterday. That was the sharpest decline in five years.
What's more, homebuilders' outlook for the future is becoming less optimistic. The National Association of Home Builders' housing market index, a gauge of homebuilder expectations, rose to 58 in July, barely up from a revised reading of 57 in June. While that increase was the first in three months, it is down from the high this year of 71 in January.
Builders were still looking for near-record consumer confidence, low unemployment, and rising incomes to keep the market afloat. Consumer confidence rose to 141.7 in July from a revised 139.2 in June, close to the record-high 144.7 reached in May and January. The nation's June unemployment rate was 4 percent, near a 30-year low, and a Commerce Department report yesterday showed June incomes grew 0.4 percent.
Aug/02/2000 10:00 ET
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