A 'Open House' sign stands outside a new home for sale in the D.R. Horton Inc. Cambridge at Southbury development in Oswego, Illinois, U.S., on Tuesday, Aug. 20, 2013. The Commerce Department is scheduled to release new home sales figures on Aug. 23. Photographer: Daniel Acker/Bloomberg via Getty Images
Daniel Acker/Bloomberg via Getty Images
By Jason Lange

WASHINGTON -- Sales of new single-family homes in America fell sharply in July to their lowest level in nine months, casting a shadow over the country's housing recovery.

Sales dropped 13.4 percent to an annual rate of 394,000 units, the Commerce Department said Friday. The government also revised sharply lower its estimate for home sales in June.

While government housing data is often subject to large revisions, the reading was well below expectations. The median forecast in a Reuters poll of analysts was for a 490,000-unit sales pace.

Mortgage rates have surbed since May on bets that the Federal Reserve feels that the U.S. economy has strengthened enough for the central bank to wind down a major stimulus program.

Most analysts expect the Fed will begin reducing monthly bond purchases in September. The program aims to lower interest rates to make it easier for businesses to expand and take on new workers. The housing market, which has been a major drag on America's economy since the 2007-09 recession, appeared to turn a corner early last year when home prices began to rise.

Last month, the median price for a new home sale rose to $257,200, up from $237,400 in the same month of 2012. Construction of new homes has accelerated during the last year, and the inventory of new homes for sale increased by 4.3 percent in July from June.

At July's sales pace it would take 5.2 months to clear the houses on the market, up from 4.3 months in June. A supply of six months is normally considered as a healthy balance between supply and demand.

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Adr Ian

It sucks when you become unemployed and have to go work some where else for half of what you were earning and have to waste your savings on paying your bills. Fall behind on the mortgage! Im 3 months behind! They are already shouting FORECLOSURE at me! I dont know what to do...
I had to open up a fundraiser just to be able to seek some support. http://gfwd.at/18Idrrq

August 25 2013 at 12:39 AM Report abuse rate up rate down Reply

House sells for $100,000 the buyer needs to earn $25,000
House sells for $160,000 the buyer needs to earn $40,000
House sells for $200,000 the buyer needs to earn $50,000
House sells for $250,000 the buyer needs to earn $62,500

Minimum wage in most states is $7.65 per hour or $15,912
Minimum wage in some states is $10.00 per hour or $20,800
Minimum wage for restaurant workers is $3.50 or $7,280

Thus, most restaurant workers, Walmart employees, U.S.A. part-time employees, Whirlpool employees, and other low wage earners cannot buy a home, but are expected to pay $500 to $1,200 per month for rent, which is $6,000 to $14,400, which is much higher than the 4:1 ratio used for mortgage loans.

August 24 2013 at 1:51 AM Report abuse rate up rate down Reply

This is so sad that people think if they can’t borrow money for next to nothing, they are going to buy a home. It wasn't to many years ago that home mortgage rates were between seven to eight percent and bank saving accounts were paying five percent interest. Along with this, the economy was humming along like a well tuned violin. It almost appears people today what to buy more than what they can afford and have all the luxuries at once that the older generation took decades of hard work to achieve.............

August 24 2013 at 12:50 AM Report abuse +3 rate up rate down Reply

Hey Evan, will you be joining the million Muslim march? Maybe the million moron march would be better.

August 23 2013 at 10:03 PM Report abuse +5 rate up rate down Reply

What about the 1 million homes still under foreclosure and auctions and these idiots claim it would take under 6 months to clear the market ?Just the new homes maybe, because the other homes do not count. Government logic. Government stats. We even pay for the smoke that blows up our exhaust pipe, which will offset the rising cost of tuition in college ? In the end, we will all be smarter.

August 23 2013 at 9:33 PM Report abuse +3 rate up rate down Reply
1 reply to no1ryb's comment

We liberals like to sweep such things under the rug in the Oval Office.

August 23 2013 at 10:00 PM Report abuse rate up rate down Reply

Rumor has it that you bought a house with food stamps, Evan.

August 23 2013 at 9:14 PM Report abuse -1 rate up rate down Reply

And by the way, I bought a house during the boom years, and the banks made me jump through hoops during the 'Qualification' process, so if anyone tells you that the banks were just handing out money to anyone and everyone, don't believe it.

August 23 2013 at 8:39 PM Report abuse +1 rate up rate down Reply

And the reason for all this is.... ???

Yep, yep, yep, Corporate GREED.... During the Bush years, 10,000 companies/jobs per month going to China and India, all to supply Wallymart with junk that you buy.

The U.S.A. economy will never come back until we all agree to work for $2.00 per day with NO health care, NO retirement, NO vacations, NO sick days, NO family days, which is what Corporate America is demanding.

August 23 2013 at 8:36 PM Report abuse -2 rate up rate down Reply
1 reply to mac2jr's comment

Posting to yourself is the first sign of insanity, Evan. Voting Dem is the second.

August 23 2013 at 8:43 PM Report abuse +2 rate up rate down Reply

I do not think it is the interest rates. When I was taking home loans in the 80's the best rate I got was 7.75%-and no one was deterred by that rate. Today people are already too in debt to spring for a home, and the banks-fearing another crash/recession are reluctant to lend.

August 23 2013 at 8:33 PM Report abuse rate up rate down Reply

So what\'s new? Unemplyment is still rising, our economy is still in the crapper, record number of Americans on food stamps, incraesing number of Americans living in poverty and obama says things are getting better.

August 23 2013 at 7:57 PM Report abuse rate up rate down Reply