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WASHINGTON (Reuters) - Sales of new U.S. single-family homes rose in June, the government said on Friday, as the housing sector continued to display resilience in a slumping economy.
New home sales climbed to a seasonally adjusted annual rate of 922,000 in the past month, a 1.7 percent increase from the revised May rate of 907,000. The June sales rate beat analysts' expectations of 921,000.
The sale of new homes in June was 16.3 percent higher than a year ago. This was the biggest year-on-year increase in new home sales since December 1998-97.
The new home sales level was above 900,000 for the seventh month in a row, the first time this has happened since the Commerce Department (news - web sites) began keeping the statistics in 1963.
New home sales climbed in the Northeast by 7.3 percent and in the South by 7.1 percent. June sales in the South set a record rate of 466,000 units.
The sale of new homes dropped 9.3 percent in the Midwest and fell 1.6 percent in the West.
May home sale were revised downward to 907,000 units from the originally reported total of 928,000. The rate of increase was revised to 0.2 percent from an originally reported 0.8 percent.
Commerce reported a 3.9-month supply of new homes for sale at the June sales pace, the seventh month in a row the supply has been below 4 months, also a first in the keeping of this series of data.
Analysts say the housing sector has remained strong on low mortgage interest rates and continued consumer confidence in spite of a gloomy economy.
``The key is the interest rate story,'' said David Seiders, the chief economist for the National Association of Home Builders.
The 30-year fixed rate mortgage stood at 7.03 percent in the week ending Friday, mortgage finance giant Freddie Mac reported. Mortgage rates have remained close to 7 percent since the beginning of the year.
Commerce reported Friday that the economy grew by 0.7 percent in the second quarter of the year, which many observers believe will be the low point of the economic slowdown.
Steadily increasing home prices have also supported the housing sector, Seiders said. The median price for an existing single family home reached a record level in June, the real estate agents' group reported.
``Evidence of house price performance in the midst of an awful stock market has helped to stimulate demand,'' Seiders said.
Changes to tax law in 1997 eliminated capital gains levies on primary residences and some secondary residences, creating an additional incentive to view real estate as a good investment, he said.
While existing home sales slipped slightly in June, they were above analysts' expectations and were still the fifth highest rate on record, the National Association of Realtors said on Wednesday.
Housing starts also rose in June.
Commerce reported on Thursday that the homeownership rate had tied a record level in the second quarter of the year at 67.7 percent, and that minority homeownership had reached a new high.
Seiders said the home builders foresee a cooling off in new home sales in the end of the year, with the average annual rate in the third quarter falling to 896,000 units before rebounding to 903,000 units in the last three months of the year.
Meanwhile, he expressed concern at the large contraction in the commercial construction market, which reflects business retrenchment in the slowing economy. |
