The sale of newly constructed homes in the U.S. fell to its lowest level in seven months, marking a 6.8 percent decline in June.
The decline was announced by the Commerce Department on Friday, July 24, reports Reuters, posting an adjusted annual rate of 482,000 units for the month of June. This is the lowest level of U.S. new home sales recorded since November 2014 and lower than May's adjusted sales pace of 517,000 units.
In the report, Reuters also noted an 18.1 percent increase in new home sales if compared against June last year, which was estimated at 408,000 units. Of the three regions in the U.S., only the Northeast area posted a 28 percent increase in new home sales. Other regions marked a 17, 11.1 and 4.1 percent decrease in sales for the West, Midwest and South areas, respectively. Despite the current declining trend in new home sales, the overall housing market recovery reportedly remains intact.
According to a report released by the National Association of Realtors on Wednesday, July 22, the sales of existing home rose 3.2 percent in June, reports Forbes. The rising demand for houses along with the limited supply has also pushed national median price to as high as $236,400. Even groundbreaking on new homes surged to 26.6 percent and permits to build new homes rose to 30% compared to previous year.
Despite the rising demand for houses, the decline in sales of new homes may mean that the residential real estate market may soon reach a plateau given tight supply and low wages, states Bloomberg. Ward McCarthy, chief financial economist at Jefferies LLC in New York, said: "There's no question the housing sector kicked into a higher gear in the second quarter, but this might be a dose of reality that the acceleration is not as sharp as it had looked."
However, McCarthy added that the "outlook for housing still remains positive," attributed mostly to the creation of more jobs, rising household formation and affordability levels.
