Builders are holding back amid constraints on available land and materials in a bid to boost prices and revenue. At the same time, their confidence is surging because more jobs and pent-up demand will probably help sustain gains in housing as homebuyers rush to take advantage of historically low borrowing costs before they rise further.
“The thing that continues to be a little bit puzzling is that builder confidence is still very high and that’s in the face of lower volumes,” said Jacob Oubina, a senior U.S. economist at RBC Capital Markets LLC in New York. “They’re still pretty confident about the backdrop. That gives us a little bit of optimism going into the next few months.”
Stocks were little changed after the report, trimming earlier gains. The Standard & Poor’s 500 Index rose less than 0.1 percent to 1,657.93 at 10:19 a.m. in New York. The S&P Supercomposite Homebuilding Index dropped 3.5 percent.
Survey Results
Last month’s sales pace was lower than any estimate of economists surveyed, which ranged from 445,000 to 525,000 after a previously reported 497,000 pace in June. Sales data going back to April were revised down.
New-home purchases were 6.8 percent higher in July than the same period in 2012 on an adjusted basis, today’s report showed. The median price of a new home increased 8.3 percent last month from a year ago to $257,200.
Purchases declined in all four regions in July, paced by a 16.1 percent slump in the West.
The supply of homes at the current sales rate rose to 5.2 months from 4.3 months in June. There were 171,000 new houses on the market at the end of July, up from 164,000 the month before.
Sales of new properties, which are tallied when purchase contracts are signed, are considered a more timely measure of the market than sales of previously owned dwellings, which are counted when a sale is final.

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