* New single family home sales fall 1 pct in June
* Median home price rises 7.2 pct from a year-ago
* Consumer confidence rises in July
(Updates markets to close)
By Lucia Mutikani
WASHINGTON, July 26 Prices for new U.S. single
family homes rose to a five-month high in June even as sales
slipped, but recovery for the broader housing market continues
to be frustrated by an oversupply of properties.
The Commerce Department said on Tuesday the median sales
price for a new home increased 5.8 percent last month to
$235,200. Compared to June of last year, prices rose 7.2
Indications that home prices were starting to stabilize
were also evident in the S&P/Case Shiller survey, whose
composite index of prices in 20 metropolitan areas was flat in
May after a 0.4 percent gain in April.
Analysts, however, said firming prices would likely be
short-lived given the huge supply of homes on the market.
"Sales are the key and the surge turns into a torrent only
if the sales firm or much more time passes," said Michael
Montgomery, a U.S. economist at IHS Global Insight in
New home sales fell 1 percent to an annual rate of 312,000
units in June. A report last week showed sales of
previously-owned homes fell to a seven-month low in June, but
average prices rose 0.8 percent to $184,300 from a year ago.
INSTANT VIEW - home prices [ID:nN1E76P0BL]
INSTANT VIEW - consumer confidence [ID:nN1E76P0J3]
Graphic- SP/CaseShiller house prices
Graphic - US new home sales and consumer confidence
"We have been expecting an increase in home prices in the
spring as distressed sales become a smaller share of activity
amid a seasonal pick-up in voluntary sales," said Michelle
Meyer, a senior U.S. economist at Bank of America Merrill Lynch
in New York. "This will likely reverse in the winter, dragging
down prices again."
A glut of homes for sale as the economy struggles with a
9.2 percent unemployment rate is weighing on the housing
market. There were about 3.77 million used homes on the market
in June, plus properties in foreclosure.
The housing market is just one trouble spot for an economy
that has been trapped in a soft patch since the beginning of
But there is also hope U.S. economic growth will regain
momentum in the second half of the year, and other data on
Tuesday showed consumers grew more optimistic about the future
The Conference Board's index of consumer attitudes rose to
59.5 from 57.6 in June, beating economists' expectations for a
reading of 56.0.
Still, confidence remains at low levels and consumers grew
less optimistic about current conditions. Confidence could be
shattered if the U.S. Congress fails to raise the country's
borrowing limit, which could trigger a debt default and
downgrade of the United States' coveted triple-A credit
The stalemate in debt talks pushed down Wall Street stocks
for a second straight day and drove the dollar downward against
a basket of currencies. But prices for U.S. government debt
rose as investors still regard Treasuries as one of the
lowest-risk investments out there.
U.S. corporations are concerned about the recovery, which
has struggled to gain momentum after the 2007-09 recession with
the drag of high unemployment and slack demand.
United Parcel Service Inc (UPS.N), the world's largest
package delivery company, gave a cautious outlook and cited the
stalled debt talks as a threat to confidence.
Ford Motor Co (F.N), announcing profits that topped Wall
Street expectations, said it now sees U.S. sales for the full
year at the bottom end of its previous forecast of 13 million
to 13.5 million vehicles.
The government is expected to report on Friday the economy
grew at a 1.8 percent annual rate, according to a Reuters
survey, after a tepid 1.9 percent pace in the first three
months of the year.
A Reuters survey of economists put the prospect of a new
recession at one in five, and 38 of the 54 economists polled
said they expected the United States would lose its triple-A
debt rating from at least one ratings agency. [ID:nN1E76P12Q]