New home sales stronger than expected

June sales down 0.6%, but annual rate comes in well above economists' forecasts.

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By Catherine Clifford, CNNMoney.com staff writer

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NEW YORK (CNNMoney.com) -- New home sales fell in June, the government said Friday, but the annual rate was stronger than economists expected.

The Census Bureau reported Friday that June sales of new single-family homes came in at a seasonally adjusted annual rate of 530,000, down 0.6% from May's revised reading of 533,000.

That revision was significant; the original May reading was 512,000.

The June figure was much higher than the economists' consensus forecast of 505,000, as compiled by Briefing.com.

Despite the monthly sales decrease, economists and investors reacted favorably because the upward revisions in previous months indicated a stronger market than previously believed.

"Sales were off slightly on the month, but the big story was the 50,000 sales added to the previous three months," said Adam York, economic analyst at Wachovia, in a written statement.

"While we are not ready to call a bottom, this is certainly a positive sign," said York.

Sales have declined 33.2% from the year-earlier rate of 793,000, the government said.

"People are still very afraid to commit," said Timothy Speiss, partner in charge at Wealth Advisers Practice, Eisner, LLP. With rising food and energy prices, mounting inflation concerns, and shrinking retirement portfolios, "people do not feel as wealthy, people do not feel as confident going into a home buying situation," he said.

"People are still in shock," said Speiss as they look at their increasing daily and monthly costs and decreasing assets. "Now when they look at a house, they have to think, do I want to take the plunge?"

The median sales price of new houses sold in June 2008 was $230,900, which is 1.4% higher than the revised median sales price of $227,700 from a month ago, but still 2% lower from the median house price of $235,500 from a year ago.

The average sale price for June was $298,600, which was $300, or 0.1%, lower than the revised average sales price of $298,900 in May. Compared with a year earlier, the average sale price has fallen 2.6% from $306,500.

"Mortgage rates were up in June - and have since moved even higher - threatening to offset much of the gains we have seen in affordability in recent months," said Wachovia's York.

The seasonally adjusted estimate of new homes for sale at the end of June was 426,000, which represented a 10-month supply of housing inventory at the current sales rate.

That was 3.8% smaller than the revised 10.4-month supply of housing inventory in May. The inventory of new homes available for sale was 20.5% higher than the 8.3-month supply of housing inventory reported in June 2007.

The National Association of Realtors reported Thursday that sales of existing slowed more than expected last month to their lowest level in 10 years. Sales by homeowners dipped to an annual pace of 4.86 million, down 2.6% from a pace of 4.99 million in May. To top of page

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