Housing home collapse demolish destroyedREUTERS/Adrees LatifBurned houses are seen next to those which survived in Breezy Point, a neighbourhood located in the New York City borough of Queens, after they were devastated by Hurricane Sandy October 31, 2012.

New home sales plunged 13.4% month-over-month in July to an annualized pace of 394,000 units in July.

Economists polled by Bloomberg were looking for new home sales to fall 2% to an annualized pace of 487,000 units.

There was also a huge downward revision to June’s number. New home sales climbed a more modest 3.6% to 455,000 units, down from the initial reading of an 8.3% rise to 497,000 units.

The median sales price of new homes sole in July was $US257,200, while the average sales price was $US322,700.

There was a huge jump in housing inventory. There were a seasonally adjusted 171,000 new homes for sale at the end of July, which represents 5.2 months supply at the current sales pace. This compares with 4.3 months supply in June.

We saw a surge in homebuilder confidence in August, and existing home sales crushed expectations.

But some economists expect the pace of home prices to cool off as bargains become harder to find, inventory bottoms, and as mortgage rates rise.

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