A decline in U.S. purchases of new homes in July may be a sign the industry took a breather following an even stronger run of sales than previously reported, according to government data Wednesday.

Key Takeaways

The slowdown as the second half got under way may reflect lack of affordability and low inventory, which have been constraints, especially for younger, first-time buyers who find it harder to get housing-related credit.

At the same time, the cooling is unlikely to derail what's been a gradual uptrend in sales that's helping the housing market make progress. The revisions for the previous three months show that demand has been supported by steady hiring and borrowing costs still near record lows. Shortages of previously owned houses on the market may also drive some prospective buyers to look at new properties.

New-home sales, which account for about 10 percent of the market, are tabulated when contracts get signed. They are considered a timelier barometer of the residential market than purchases of existing homes, which are calculated when a contract closes. The National Association of Realtors will release those latest figures on Thursday.