U.S. new-home sales fall in June

WASHINGTON - Sales of newly constructed U.S. homes fell in June, a sign that real estate continues to be a weak spot in the economy.

New-home sales fell 8.1 percent last month to a seasonally adjusted annual rate of 406,000, the Commerce Department said Thursday. The report also revised the May sales rate to 442,000 from 504,000.

Purchases fell 20 percent in the Northeastern United States, followed by less extreme declines in the Midwest, South, and West. Modest sales caused the inventory of new homes on the market to increase to 5.8 months' worth, the highest since October 2011.

The median sales price - half the homes sold for more, half for less - was $273,500, up 5.3 percent over the last 12 months.

The report underscored Federal Reserve Chair Janet Yellen's "observation in testimony last week that housing sector data still are 'disappointing,' " said Dana Saporta, director of economic research at Credit Suisse.

Home sales had been improving through the middle of 2013, only to stumble over the last year because of a mix of rising prices, higher mortgage rates, and meager wage growth.

The pressure from mortgage rates has eased since the start of 2014, and the pace of price increases has slowed. Still, other indicators suggest that home buying has stalled after rebounding from lows reached during the recession.

The National Association of Realtors reported that sales of previously owned homes increased 2.6 percent in June to a seasonally adjusted annual rate of 5.04 million. That marked the first time sales have been above the five million mark since October.

Economists were encouraged by the second straight monthly gain in existing-home sales, though they are still hovering below the recent peak of 5.38 million sales hit in July 2013.

Nasty winter storms weighed on sales of both existing and new homes in late 2013 and early 2014, making it unlikely that last year's pace can be matched.

Sales of existing homes are expected to be below the 5.1 million bought last year and the 5.5 million annual sales that would be consistent with a healthy housing market.

Yet there are indications that sales could pick up.

Along with the arrival of spring, average mortgage rates have dropped to 4.13 percent, from 4.53 percent at the beginning of this year, according to Freddie Mac.

The rate of price gains has slowed as the inventory of homes for sale has improved. But wage growth has barely kept pace with inflation, reducing how much income people have to spend and save for down payments.