The Census Bureau reported Monday morning that 412,000 new single-family homes were sold in July, well below the roughly 430,000 that economists expected and fewer than in June.
Brian Wesbury of First Trust Advisors described the weak report as “to be expected when the overall economy is a plow horse, not a race horse.”
While the number of new-home sales has grown by about 12 percent since last July, it remains far below the pre-housing bubble norms, when more than 800,000 new home sales in a month was normal.
Part of the slow growth reflects increasing demand for home builders to make apartments rather than single-family homes. The Census Bureau reported strong growth in construction permits last week, but mostly for multi-family construction.
The recovery has been stronger for pre-owned houses. The National Association of Realtors reported last week that purchases of existing homes increased by 2.4 percent to 5.15 million in July, and the inventory of homes for sale, while still low, continues to grow.
Federal Reserve Chairwoman Janet Yellen has repeatedly identified the slow housing market as one of the obstacles to a faster economic recovery. Fed officials do not have a clear idea of what’s preventing stronger housing growth, the minutes from recent meetings of its monetary policy committee show, but Yellen suggested in congressional testimony in July that lenders’ tight credit conditions for home loans are a “headwind.”
Earlier this year, the Obama administration’s top housing regulator, Mel Watt, announced that he would aim to extend mortgage credit to more qualified borrowers through the bailed-out mortgage businesses Fannie Mae and Freddie Mac.