- Sam Bullard, a senior economist at Wells Fargo Securities
Sales of new U.S. single-family homes declined for a second consecutive month in July, but an increase in the supply of properties on the market along with slower price gains are estimated to help boost demand in the coming months. According to the Commerce Department, new home sales fell as much as 2.4% to a seasonally adjusted annual rate of 412,000 units, hitting the lowest level since March. While sales were weaker than analysts had projected, data for the last three months was revised upwards to show 33,000 more new homes sold than previously recorded. In contrast, purchases of previously owned properties have risen for four months in a row, reaching an almost one-year high in July, according to data from National Association of Realtors. Demand for existing homes picked up last month as low borrowing costs and an increase in inventory drew buyers. Combined annualized sales of existing and new homes totalled 5.56 million in July, recording the fastest growth since October.
The latest numbers reinforce the view of a housing recovery that continues to disappoint economists but shows enough strength to keep hopes alive that a stronger performance is looming as the U.S. economy and employment improve. However, limited progress in the housing market is a threat for the nation's economy, according to Federal Reserve Vice Chairman Stanley Fischer.
© Dukascopy Bank SA