The supply of existing homes for sale is still extremely low, but the supply of newly built homes moved higher in July to 5.8 months of inventory. The consensus of analysts polled by Econoday was for the number to come in unchanged from June's 610,000 units.
The median sale price for a new home sold in July was $313,700. Meanwhile, the number of new homes for sale in July, 276,000, was 1.5% above its level in June. Economists expect a modest rebound in housing activity in the third quarter. The rising prices have made homes too expensive for some would-be buyers, even as healthy hiring has lowered the unemployment rate to a 16-year low of 4.3 percent. Despite the decline, year-to-date sales are 9.2% above their level in the first seven months of 2016.
"This looks bad, but note that sales over the previous three months were revised up by a total of 46K", Ian Shepherdson, chief economist for Pantheon Macro, said Wednesday.
A survey last month by Fannie Mae, the largest USA mortgage guarantor, showed a drop in the share of respondents saying now is a good time to buy a home as well as a surge in the number of those who believe this is a bad time to buy.
Housing weighed on the economy in the second quarter, subtracting almost three-tenths of a percentage point from gross domestic product. Shares in the nation's largest homebuilder, D.R. Horton, declined 0.56 percent and Lennar Corp slipped 0.54 percent.
Despite the acute housing shortage, builders are struggling to fill the void, citing supply constraints, including labor, land and finance.
In July, 47% of the estimated 49,000 monthly sales were sales for homes priced at less than $300,000. New home sales fell in the Northeast, South and West.
"A balanced market tends to be around a six-months supply, so we are really recovering from very tight inventory", Ratiu said.
At July's sales pace it would take 5.8 months to clear the supply of houses on the market, up from 5.2 months in June. Still, new housing stock is less than half of what it was at its zenith during the housing bubble.
The Midwest region recorded a 6.2% increase in sales.