The glut of brand new unsold homes for sale across the US hit a record high in June, a government report showed today, as some economists warned of a worsening market in coming months.
The latest data appeared to confirm a cooling trend in the US housing market, following a boom and sky-rocketing prices of recent years that have priced many hopeful new home owners out of the market.
In recent months, a steady rise in interest rates hikes has prompted a downturn in home buying. Sales of new US homes declined 3% in June to a weaker-than-anticipated annualised rate of 1.131 million units, the Commerce Department said today.
The drop in new home sales was steeper that most market-watchers had expected. Wall Street economists had only predicted sales to decline to 1.164 million units.
Analysts also zeroed in on the inventory of unsold new homes which leapt to a record high last month. The US government said the inventory of unsold new homes on the market rose 0.7% in June to a record 566,000, representing a 6.1-month supply of brand new homes at the June sales pace.
Most of the unsold new homes are located in the south of the country, the report showed.
Apart from a slight one month drop in the inventory in May, the stock of unsold new homes on the market has risen steady over the last 12 months.
Some analysts are calling for a bursting of what they see as a property bubble and the report could exert fresh pressure on the Federal Reserve to pause its cycle of rate hikes.
The home sales market has been one of the key pillars propping up the world's largest economy, and while inflation is rising, the Fed will not want to jack up interest rates too much and risk a property market crash.
Aside from rising interest rates, US homeowners have also been buffetted by rising energy prices as the economy shows signs of cooling.
