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New home sales fall, but prices rise slightly

WASHINGTON— Fewer people bought new homes in June, evidence that the housing market remains weak.

Sales of new homes fell 1 percent last month to an annual rate of 312,000, the Commerce Department said Tuesday. That’s less than half the 700,000 that economists say is typical in healthy markets.

Last year was the worst for new-home sales on records dating back a half century. Through the first six months of this year, sales are lagging behind last year’s totals.

A separate report showed home prices in major U.S. cities rose for the second straight month in May. But after adjusting for seasonal buyers, prices fell in a majority of markets.

The Standard & Poor’s/Case-Shiller home-price index said prices increased in 16 of the 20 cities tracked. Over the last 12 months, prices have fallen in 19 of the 20 cities tracked.

Housing remains the weakest part of the U.S. economy. High unemployment, larger down payment requirements and tougher lending standards are preventing many people from buying homes. And some potential buyers who can clear those hurdles are holding off, worried that home prices have yet to bottom out.

While new homes represent less than one-fifth of the total housing market, they have an outsize impact on the economy. Each new home creates an average of three jobs and $90,000 in taxes, according to the National Association of Home Builders.

Sales of new homes fell 15.8 percent in the Northeast and 12.7 percent in the West. Sales rose 9.5 percent in the Midwest and 3.4 percent in the South.

The median price of a new home rose to $235,200 nationally.

The number of new homes for sale at the end of the month dropped to a record low of 164,000, down 1.8 percent from June. At the June sales pace, it would take 6.3 months to exhaust the current supply of new homes for sale. Economists consider a 6.3 month supply of homes a normal level, indicating that builders are succeeding in cutting back construction enough to meet demand.

Last year was the fifth straight year that new-home sales fell. That followed five straight years of record-high sales, when the housing market was booming.