New-Home Sales Decline

New home sales fell 3% in June as a long-expected slowdown finally began taking hold despite the incentives and discounts that builders are offering homebuyers.The U.S. Census Bureau reported that new single-family home sales dropped from a seasonally adjusted annual rate of 1.17 million in May to 1.13 million in June. May sales were revised downward from 1.23 million. "We are seeing incentives becoming much more widespread," National Association of Home Builder economist Michael Carliner said. Most incentives involve upgrades in kitchen cabinets or giving away optional items, he said, rather than financing. Builders are also dealing with high inventories of unsold homes. "I think there will have to be an adjustment in starts to keep inventories in line," the NAHB economist said. "If we don't see a slowdown in starts, then it is a sign of danger."