Sales of new homes in the United States jumped 13.8 percent in June from the previous month, the Commerce Department said on Friday.
The June seasonally adjusted annual rate of 776,000 was well above expectations and 6.9 percent above the same month last year, bringing the key sector to a level above where it was before the coronavirus pandemic walloped the world’s largest economy in March.
Growth was seen in every region, with the northeast, home to the largest early outbreak of COVID-19, seeing sales spike 89.7 percent.
Inventory also tightened to 4.7 months from 5.5 months in May.
Analysts said the sector was supported by cheap mortgages following the Federal Reserve’s lowering of its benchmark lending rate in March to 0-0.25 percent, as well as the easing of lockdowns meant to stop the coronavirus.
“Record-low mortgage rates and pent-up demand from the spring continue to be main drivers for the housing market this summer,” Joel Kan of the Mortgage Bankers Association said.
Ian Shepherdson of Pantheon Macroeconomics said home buyers appeared to defy rising coronavirus cases across the US.
“Sales rose across the country in June, despite the emerging second wave of COIVD infections, which started to hit activity in the south in the final third of the month,” he wrote in an analysis.
However Rubeela Farooqi of High Frequency Economics warned that sales in the second quarter ending in June were on average 676,000 annualized, below the 701,000 annualized seen in the first quarter.
And with weekly jobless claim data indicating more than a million people newly filing for unemployment each week, Farooqi warned “ongoing weak labor market conditions could eventually impact households’ ability to purchase homes.”