New home sales drop 8.4%

Sales of newly built homes in the U.S. fell in June to the lowest level in five months, showing that the recovery of the housing market remains uneven.

New single-family home sales decreased by 8.4% from May to a seasonally adjusted annual rate of 350,000, the Commerce Department said Wednesday. June's sales were the lowest since January but were up 15.1% compared to the same month a year ago.

Results were lower than expected. Economists surveyed by Dow Jones Newswires had forecast an annual rate of 375,000, which would have been a 1.6% gain over the figure previously reported for May.

The rate of sales in the previous three months was revised upward, to 382,000 in May, 358,000 in April and 352,000 in March.

The median price for a new home, meanwhile, fell in June 3.2% from the same month a year ago to a median of $232,600.

The June data reflect a reversal of recent gains made in the housing market. It is still coping with the aftermath of a collapse in prices that started six years ago, and there are still signs of weakness. Sales of previously occupied homes dropped 5.4% in June to the lowest level in eight months amid a thin inventory of properties for sale, the National Association of Realtors said last week.

Prospective homeowners face tightened credit restrictions that make it hard to secure record-low mortgage rates. And more than 11 million Americans owe more on their mortgages than their homes are worth, so these "underwater" homeowners are less likely to move if they can't sell their homes.

In an interview with Charlie Rose Monday, Treasury Secretary Tim Geithner said the housing market is "still very tough." The administration has worked hard to help distressed homeowners, but there is much more to be done, Mr. Geithner said.

There are some signs of growth. Home construction jumped 6.9% last month to the highest level since October 2008, the Commerce Department reported last week. Home builder confidence this month took its biggest monthly jump in nearly a decade, according to the National Association of Home Builders.

New-home sales peaked in July 2005, when they hit an annual pace of nearly 1.4 million. Sales fell to a slow pace of 273,000 in February 2011. 

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