New Home Sales Fall 2.3% in July, U.S. Report Shows

Sales of new homes fell 2.3% in July, giving up half of their gain the previous month, the government said today in a report showing continuing weakness in the housing industry.

The Commerce Department said new home sales totaled a seasonally adjusted annual rate of 548,000 after advancing a revised 4.7% in June. The department originally reported June sales up 8%.

The continuing weakness was further illustrated by the department’s downward revision in the May sales figure as well--last month’s reported 2.3% gain was reduced to just 0.6% today.

Until May, new home sales had declined for five straight months. For the first seven months of the year, they have fallen 12.4% below the pace of 1989.

The department also said inventories of new homes showed a 7.8-month backlog at the July sales pace. It had been 7.7 months in June.

Analysts have attributed the weakness in the industry to high interest rates, consumer caution because of adverse economic news and a glutted market.

After peaking at 10.67% in March, fixed-rate, 30-year mortgages fell to 9.98% by the end of July. But by last Friday, rates had moved up to 10.29%.

Commerce said the median price of a new home fell 4.7% in July to $121,000. The median price means half of the homes cost more and half less. The median price of an existing home that month was $98,400, according to the National Assn. of Realtors.

Sales in the Northeast, which have been sluggish for more than a year, fell 10.1% to an annual rate of 80,000 units. The department also revised the June increase downward, from 36.9% to 25.3%.

Sales also fell in the West, down 4.9% to 135,000 units, while they were unchanged at 237,000 units in the South.