WASHINGTON -- Sales of new homes jumped last month, but it was the second-weakest month on record. The lackluster economy has made potential buyers skittish about shopping for homes.
New home sales rose nearly 24 percent in June from a month earlier to a seasonally adjusted annual sales pace of 330,000. May's number was revised downward to a rate of 267,000, the slowest pace on records dating back to 1963. Sales for April and March were also revised downward.
The housing market had boomed earlier in the year on the strength of federal tax credits. Since they have expired, the number of people looking to buy has dropped even with the lowest mortgage rates in decades.
Despite the month's increase, sales are still down 72 percent from their peak annual rate of 1.39 million in July 2005.
New homes sales made up about 7 percent of the housing market last year. That's down from about 15 percent before the bust. Weak sales mean fewer jobs in the construction industry, which normally power economic recoveries.
Each new home built creates, on average, the equivalent of three jobs for a year and generates about $90,000 in taxes paid to local and federal authorities, according to the National Association of Home Builders. The impact is felt across multiple industries.
Builders have sharply scaled back construction in the face of a severe housing market bust. The number of new homes up for sale in March fell 1.4 percent to 210,000, the lowest level in nearly 42 years.
Due to the sluggish sales pace, it would still take eight months to exhaust that supply, above a healthy level of about six months.
The median sales price in June was $213,400. That was down 0.6 percent from a year earlier and down 1.4 percent from May.
New home sales rose by 46 percent in the Northeast, 33 percent in the South and 21 percent in the Midwest. The West posted a nearly 7 percent decline.