WASHINGTON (Reuters) – Sales of new U.S. single-family homes increased in July after three straight monthly declines, but housing market momentum is slowing as surging housing prices amid tight supply sideline some first-time buyers from the market.
Though the report from the Commerce Department on Tuesday showed a big increase in new housing inventory, the jump was driven by a record rise in homes that are yet to be built. Builders are taking longer to complete houses, hobbled by expensive raw materials as well as scarce land and workers.
“While demand for new homes remains strong, high prices and backlogs in construction will temper sales in the months ahead,” said Nancy Vanden Houten, a U.S. economist at Oxford Economics in New York. “Homebuilders are reportedly turning away buyers as they attempt to reduce the backlog of sales.”
New home sales rose 1.0% to a seasonally adjusted annual rate of 708,000 units last month. June’s sales pace was revised up to 701,000 units from the previously reported 676,000 units.