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New Home Sales Unexpectedly Fall

As US homebuilders continue to be apprehensive about taking on new projects, new home sales unexpectedly fell about 1 percent in June to an annual pace of 312,000, down slightly from May's revised pace of 315,000. Sales were up about 1.6 percent from a year ago, but the pace failed to meet the expectations of analysts, who had projected a sales pace of 320,000, on average.

Ever since new home sales fell to a record-low pace of 278,000 in February, they have been one of the US economy's poorest-performing sectors. Since new home sales set a record high pace of 1.4 million in July 2005, the pace has fallen a staggering 78 percent. And since the recession kicked in in 2008, home builders have been reluctant to build new homes, as the nation's job market has remained shaky.

Demand for new homes has also been held in check by the oversupply of distressed properties on the market, which has provided ample opportunities to save money for spending-wary homebuyers. At the end of June, there were an estimated 164,000 new homes on the market. At the current pace of sales, it would take 6.3 months to go through that inventory.

July 28, 2011

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