New-home sales drop 8.4% after 2 months of gains

Sales of new homes fell 8.4% in June after rising for two straight months.

 

While the number of sales was below that of the previous month, it was 15.5% above the number sold in June 2011, according to statistics from the Census Bureau and the Department of Housing and Urban Development. 

 

The drop could be at least partly because so few new homes are for sale, a problem that would-be buyers also are finding with existing homes. The number of existing homes sold fell 5.4% from May to June.

 

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"The very tight inventory of new homes for sale at this time poses a challenge to builders, who’d like to have a larger selection for buyers to choose from but continue to confront issues with obtaining credit to build viable new projects,” NAHB chief economist David Crowe said in a news release.

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Nationwide, 144,000 new housing units are for sale, which would last 4.9 months at the current rate of sales. At the June rate, builders are on track to sell 350,000 new homes in 2012.

 

The median sale price of a new home was $232,600 in June, and the average sale price was $273,900.

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"A dearth of construction has led to a very significant inventory shortage," Carl Riccadonna, a senior U.S. economist at Deutsche Bank Securities, told Bloomberg. "If you want to buy a newly built home, good luck finding one."

 

In the Northeast, where sales plunged 60% from May, only 17,000 new homes were for sale, the lowest number since the federal government began keeping records in 1973.

 

"The homebuilding sector has been shut down for about five years, so there’s no inventory to buy," Riccadonna said. "If we want to take the temperature of the housing market, probably the worst series to look at is new-home sales."

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Builders broke ground on 23.6% more new homes in June 2012 than they did in June 2011, and are on track to build 760,000 new homes this year, if that pace continues.

 

Here are new-home sales numbers for June by region:

• Midwest: Up 14.6%
• West: Up 2.1%
• South: Down 8.6%
• Northeast: Down 60%