New-home sales dip in July

NEW YORK (CNNMoney) -- New-home sales fell once again in July, the third straight month of declining sales for hard-pressed home builders.

New homes sold at a seasonally adjusted annualized rate of 298,000, a modest 0.7% drop from a downwardly-revised rate of 300,000 homes sold in June, the Census Bureau said Tuesday. It was also below the rate of 310,000 that a panel of housing market analysts at Briefing.com had forecast.

Sales rose 6.8% year-over-year from 279,000 in July 2010.

"We've been bouncing around the 300,000 level for months, for years, really," said David Crowe, the chief economist for the National Association of Home Builders. "It reflects continued buyer concern with the weak economy."

The median price for a new home sold in July was $222,000, down about 5.5% from June but up 8.8% from 12 months earlier.

The inventory of new homes for sale stood at 165,000 during the month. It would take 6.6 months to sell off those homes at the current sales rate.

With sales so slow, new-home construction is also slumping. The home building industry is normally a major contributor to the economy, but it is so depressed right now that it's it a drag on the economic recovery.

Crowe said home sales might weaken even more in the aftermath of the debt-ceiling debate, the downgrading of U.S. debt and the subsequent volatility in the financial markets.

"We might see August figures drop because of the market turmoil and the uncertainly it creates in consumers," he said.

Historically low interest rates do not seem to be helping. Applications for mortgages have spiked, but most of the increase is for refinancing old mortgages rather than for purchasing new homes, according to Crowe.