U.S. new home sales likely to have risen slightly in July

U.S. new home sales are expected to have risen slightly in July. In the prior month, new home sales had fallen 5.3 percent to 631,000-unit pace. All regions had recorded falls, though the largest fall was seen in the South, which accounts for slightly more than half of new home sales. Sales have now dropped in two of the past three months, signifying that softness is becoming harder to dismiss as transitory, noted Wells Fargo in a research report.

Lack of supply has been a persistent factor holding back sales, as the number of homes available for sale has not been successful to meet demand for homeownership. This continues to be a major part of the story; though inventories of homes rose in June, completed inventories remain near historic lows. However, another factor to watch is whether higher home prices and increasing mortgage rates are serving to erode demand. In the University of Michigan’s Consumer Sentiment Index, the share of consumers stating that now is a good time to purchase a home continues to slide.

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