U.S. new home sales fell more than expected in July to the their lowest pace since December, as higher mortgage rates cooled the housing market, a government report showed on Wednesday.
Sales of new homes tumbled 6.4 percent to a seasonally adjusted annual rate of 1.134 million units last month from a downwardly revised 1.211 million in June, the Commerce Department said. Analysts polled by Reuters were expecting sales to slow more gently to a 1.29 million clip from the originally reported 1.33 million unit pace.
Inventories of homes available for sale at the current sales pace ballooned to a 4.2 months’ supply, the highest level since February 2003.
Mortgage rates, which hovered not far above records low levels in early 2004, began to creep upward in early summer on expectations of a strengthening U.S. economy and rising short term-interest rates. While mortgage rates drifted lower from summer highs, they edged up last week and new applications for home loans fell, a mortgage banking trade group reported earlier on Wednesday.
Sales of new homes plummeted 15.9 percent to 522,000 in the South, the region where most new homes are sold. Sales dipped 1.7 percent to 290,000 in the West, and collapsed by 23.5 percent in the Northeast to 62,000. Sales rocketed to a new high in the Midwest, rising 21.5 percent to 260,000.
Sales of already-owned homes also dipped last month, but still posted the third highest pace on record, the National Association of Realtors reported on Tuesday.
