July US new home sales growth hits 10-month low

New US home sales hit a 10-month low in July as prices forged higher, pointing to a possible slowdown in demand, official figures showed Wednesday.

The sharp monthly drop in sales reversed two consecutive months of gains and was largely driven by a record sales plunge in the western United States, according to the Commerce Department.

Analysts in recent months have said the market is exceedingly tight, with supply failing to keep pace with demand, pricing new would-be homeowners out of the market.

Sales of new homes fell 9.4 percent for the month to an annual rate of 571,000 but the decrease appeared larger after June's numbers were revised upward by more than three percent.

Analysts had been expecting a decrease of only 2.3 percent.

July's numbers are also subject to revision but year-over-year the result was still 8.9 percent below July of 2016.

Economists said Wednesday, however, that the dip in sales might not be statistically significant because it was within a large, 12.9 percent margin of error.

"The trend in new home sales has risen this year and inventory remains tight, though the number of homes for sale has risen by 16 percent over the past year," Ian Shepherdson of Pantheon Macroeconomics said in a research note.

"Prices are rising too but the data are so volatile that it's hard to be sure what the underlying trend rate of increase is at any given point."

Median housing prices moved up 0.7 percent to $313,700 but remained below December's all-time high of $332,700.

Sales in the western United States plunged 21.3 percent to an annual rate of 144,000 units, the biggest monthly drop in percentage since February of 2014.

At the current sales rate, the existing housing stock amounted to a supply of 5.8 months, up from 5.2 months in June -- the first increase in supply in three months.