New Home Sales Rose in June

The gain in sales pushed down the supply of homes to 4.9 months, the lowest since February of previous year, from 5.1 months in May.

New single-family homes sales jumped 10.4 percent in the Midwest and soared 10.9 percent in the West, which has seen a sharp increase in home prices amid tight inventories.

USA consumer confidence held steady in July and new single-family home sales hit their highest level in almost 8-1/2 years in June, suggesting sustained momentum in the economy that could allow the Federal Reserve to raise interest rates this year.

Sales increased 3.5 percent to a 592,000 annualized pace, the fastest since February 2008, Commerce Department data showed Tuesday in Washington.

Low mortgage rates and a healthy job market have lifted the real estate market, which continues to recover from the depths of the housing bust that began almost a decade ago. Indeed, the Case-Schiller Indices, the leading measure of USA home prices, found Tuesday that prices in May increased 5.2% since the same month in 2015. The news comes just after the National Association of Realtors announcement last week that existing home sales hit their highest level since 2007.

Builders remain relatively confident that they’ll continue to expand, although their optimism waned slightly in July. This June, only 31 percent of new homes sold were completed, indicating that builders are being more conservative. The index had mostly held at 58 this year before rising to 60 in June. This represents a supply of 4.9 months at the current sales rate. Their outlook for sales over the next six months slid three points.

The survey’s so-called labor market differential, which closely correlates to the jobless rate in the employment report, improved this month after slipping in June.

Economists had forecast that sales rose 1.6% at a seasonally adjusted annual rate of 560,000, according to Bloomberg. The Bureau also revised its May rate to 572,000. Mortgage buyer Freddie Mac said the average for the benchmark 30-year fixed-rate mortgage was 3.45 percent last week, down sharply from 4.04 percent a year ago.