US new-home sales fell in July back to their April level, pushing inventory on the market to the largest supply in nearly three years, according to government data released today.
Sales of new homes slowed to an annual rate of 412,000 units, down 2.4% from June, the Commerce Department said.
The drop was unexpected, with the average analyst estimate projecting a rise to a 427,000 units annual pace.
Modest upward revisions to prior months' sales helped to temper the July weakness, and compared with a year ago, July sales were up 12.3%.
The median home price fell 3.7% in July to $269,800, matching January's level for the lowest price this year.
Inventory rose to 205,000 homes, representing a supply of 6 months at the current sales pace, up from 5.6 in June.
Inventory was at its highest level since October 2011.
"Rising supply and flat sales is slowing price gains; construction needs to slow," said Ian Shepherdson of Pantheon Macroeconomics.
The high inventory slowed price gains to 6.5% year-over-year in the three months to July from 10.8% in the same period last year, he said.
"New construction can't rise much against this backdrop," Mr Shepherdson added.