WASHINGTON - Despite somewhat lower borrowing rates and still-strong consumer confidence, demand for new homes eased significantly in June, adding to the recent string of decreases that point to a broader cooling in the U.S. economy.
Sales of new single-family homes fell for the third month in a row, down 3.7% to a seasonally adjusted level of 829,000, the Commerce Department said Wednesday. June's sales numbers - the lowest level since December 1997 - followed a revised drop in May housing sales, off 0.9% to 861,000. May's level had been estimated at 875,000 units.
The recent decline came mostly from softer demand in the South and Midwest, which may be partially attributable to weather-related problems. Because of the string of declines, 4.9 months' supply of single-family homes is available for sale - the most in three and one-half years.
Still, despite some flattening of interest rates, the steady series of declines add to the signs that the economy is slowing comfortably. That should prove some relief for investors, who are concerned that the Federal Reserve may be pushing toward more rate hikes in the face of a stronger-than-expected second quarter and other sales numbers that point to continued consumer spending.
In a Dow Jones Newswires/CNBC survey of 10 economists, the median forecast called for a 0.3% increase in sales for the most recent period. The drop in June, coupled with the lower May level, should provide some comfort to investors.
By region, demand was weakest in the Midwest and South, where sales dropped 7.0% and 5.1%, respectively. Sales were off 1.5% in the Northeast, but climbed 0.5% in the West.
The June drop also came despite another drop in home prices. The median price of a single-family house fell $2,200 that month, to $159,000, the Commerce Department said.