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June home sales surge
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July 30, 1999: 11:29 a.m. ET
Robust sales defy predictions the housing market would continue to cool
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NEW YORK (CNNfn) - New home sales sizzled during June as a surge of building across the Southern and Western states helped overcome predictions the housing market would continue to slow, the government said Friday.
Sales of newly built single-family houses rose 3.1 percent to a seasonally adjusted annual rate of 929,000, helping reverse a revised 4.1 percent decline in May, the Commerce Department reported.
That easily surpassed the annual June rate of 892,000 expected by economists polled by Reuters and the revised 901,000 rate reported for May.
The report followed an earlier report from the Commerce Department that Americans' incomes climbed at their fastest clip in seven months during June.
Economists scratch their heads
The surge in home sales left economists wondering if consumers were perhaps trying to beat further mortgage rates increases. Many had expected home sales to continue to slow, particularly with mortgage rates rising following the Federal Reserve's decision to boost interest rates last month.
"Households may very well be rushing to buy on fears that mortgage rates will move even higher," said Hai T. Hoang, an economist at Bank of America Securities. "However, other than mortgage rates, housing fundamentals remain quite supportive.
"The [Federal Market Open Committee] is likely disappointed housing is not slowing."
Building was most robust along the West Coast, where new home sales jumped 12.8 percent, and down South, where sales rose 6.7 percent. Sales were weakest in the Northeast, where the annual rate dropped 11.3 percent.
The median sales price of new homes sold rebounded as well, rising to $157,000. That topped the revised $149,900 reported during May and was just off the all-time high of $159,900 reported during February.
Meanwhile, the June mean price of new houses sold did set a new record of $196,500. That compared to a revised level of $185,100 in May and easily beat the previous record of $190,500 set during April.
The benchmark 30-year Treasury fell sharply after the report. Less than an hour after the report was released, the bond was off 19/32 in price, for a yield of 6.11 percent.
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Commerce Department
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