New-home sales fell unexpectedly in July for the second month as the housing recovery makes only fitful progress.
Sales declined 2.4% to a 412,000 annualized pace, the fewest since March and weaker than the lowest estimate of economists surveyed by Bloomberg, after a 422,000 rate in June, the Commerce Department reported today in Washington.
Housing has advanced in fits and starts this year, buffeted by tight credit and slow wage growth. A shortage of skilled labor and supply-chain bottlenecks also have hindered construction even as population growth boosts demand for shelter. Bigger gains in employment and wages would stoke a more-rapid recovery.
"It's a little bit disappointing," said Thomas Simons, an economist at Jefferies LLC in New York and the top forecaster of new-home purchases over the past two years, according to data compiled by Bloomberg. "The new-home sales data have no traction whatsoever and doesn't seem to be gaining at all."
The median forecast of 70 economists surveyed by Bloomberg called for the pace to accelerate to 430,000. Estimates ranged from 414,000 to 470,000. June's pace was revised up from a previously reported 406,000.
The median sales price of a new house climbed 2.9% from July 2013 to $269,800, today's Commerce Department report showed.
Purchases dropped in three four U.S. regions, led by a 30.8% slump in the Northeast. The West declined 15.2% and the Midwest fell 8.8%. Sales climbed 8.1% in the South.
The supply of homes at the current sales rate rose to six months, the highest since October 2011, from 5.6 months in June. There were 205,000 new houses on the market at the end of July, the most in almost four years.
New-home sales, which last year accounted for about 5% of the residential market, are tabulated when contracts are signed, making them a timelier barometer than transactions on existing homes.
Existing-home sales picked up last month as low borrowing costs and an increase in inventory drew buyers. The annual pace of purchases climbed to 5.15 million in July, the best showing since September, according to the National Association of Realtors. Residential construction also rebounded, with starts climbing 15.7% last month to a 1.09 million annualized rate, the Commerce Department reported last week.
Builders and their suppliers see room for growth as the job market improves. As foreclosures and other distressed property sales become a smaller share of the market, housing growth will accelerate, said Robert A. Niblock, chairman and chief executive officer of home-improvement chain Lowe's Cos., based in Mooresville, N.C.
"Signals from the housing market appear mixed," Niblock said on an Aug. 20 earnings call. "We believe home-improvement spending will continue to progress in tandem with strengthening job and income growth."