NEW YORK (CNNMoney) -- New-home sales flopped in June, an indication that the housing market may take longer than expected to recover.
Sales of new homes fell to an annual pace of 350,000, down 8.4% from May when sales hit a two-year high, according to the Census Bureau report issued Wednesday.
The modest sales pace is a far cry from the boom years, when the annual rate reached the 1.4 million mark in July 2005.
The June performance fell well short of expectations. A consensus of housing market analysts, as measured by Briefing.com, had projected a sales rate of 373,000.
The report was bad news for the overall economy. A recovery in home construction would cut into the nation's high unemployment rate, currently at 8.2%.
For every new home built, about three jobs are created, according to David Crowe, chief economist for the National Association of Home Builders.
Many of those jobs go to some of the workers hardest hit by the nation's current economic malaise. About half are on construction sites. The others go to the makers of building materials, appliances, furniture and other home products, plus the truckers who take them to the site.
Confidence among builders had been higher lately. Applications for permits to build new homes rose by double-digit percentages in June compared with a year earlier.
But a slowdown in home sales could cause builders to lose some of that fragile confidence.
According to Pat Newport, an analyst for IHS Global Insight, the report was not as bad as it looked at first blush.
"The headline number was down, but it could be revised upward next month," he said.
Indeed, the May report -- when it first broke in late June -- showed a sales rate of 369,000. But that was revised to 382,000 in Wednesday's release.
And the overall trend is still positive. Even June's disappointing figures were 16% higher than June 2011.
Newport prefers long-term sales trends rather than month-over-month changes, which can get quite bumpy. "I look at three-month moving averages and they have been up," said Newport.
Other good signs, according to Crowe, include a tight supply of new homes for sale.
"Existing home inventory is low, particularly at the affordable level, where investors are competing with first-time homebuyers," he said. "Phoenix is a good example. There's a dearth of existing homes there and new construction is doing well."
|What we want Apple to unveil at WWDC|
|Millennials squeezed out of buying a home|
|7 traits the rich have in common|
|Big Data knows you're sick, tired and depressed|
|Your car is a giant computer - and it can be hacked|
|Overnight Avg Rate||Latest||Change||Last Week|
|30 yr fixed||3.43%||3.42%|
|15 yr fixed||2.69%||2.69%|
|30 yr refi||3.46%||3.42%|
|15 yr refi||2.73%||2.68%|
Today's featured rates: