Construction workers building a new home in Miami, Florida.
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Sales of new U.S. single-family homes rebounded sharply in June, but sales for the prior three months were revised down, indicating that the housing market continued to tread water despite lower mortgage rates and a strong labor market.
The Commerce Department said on Wednesday new home sales rebounded 7.0% to a seasonally adjusted annual rate of 646,000 units last month. May’s sales pace was revised down to 604,000 units from the previously reported 626,000 units. Data for March and April was also revised down.
Economists polled by Reuters had forecast new home sales, which account for about 11% of housing market sales, increasing 6.0% to a pace of 660,000 units in June.
New home sales are drawn from permits and tend to be volatile on a month-to-month basis. Sales increased 4.5% from a year ago. The median new house price was unchanged at $310,400 in June from a year ago.
Despite cheaper mortgage rates and the lowest unemployment rate in nearly 50 years supporting demand for housing, expensive materials and land and labor shortages are constraining builders’ ability to produce more affordable housing.
The housing market hit a soft patch last year and has since struggled to gain traction, with residential investment contracting for five straight quarters. A report on Tuesday showed home resales tumbled in June as tight supply pushed previously owned house prices to a record high.
While single-family homebuilding rebounded in June, permits increased moderately and continued to lag housing starts. The 30-year fixed mortgage rate has dropped to an average of 3.81% from a more than seven-year peak of 4.94% in November, according to data from mortgage finance agency Freddie Mac.
New home sales in the South, which accounts for the bulk of transactions, rose 0.3% in June to a 13-month high. Sales in the Midwest dropped 26.3% to their lowest level since September 2015. Sales in the West rebounded 50.4%, the biggest gain since August 2010, more than recouping May’s 38.5% plunge.
In the Northeast, sales dropped for the second straight month, hitting their lowest level in eight months.
There were 338,000 new homes on the market last month, up 0.6% from May. At June’s sales pace it would take 6.3 months to clear the supply of houses on the market, down from 6.7 months in May. About 62% of the houses sold last month were either under construction or yet to be built.
