New single-family home sales decreased 11.3% to a 619,000 annual pace last month, the slowest since November, government data released Wednesday show. The figure was below almost all estimates in a Bloomberg survey of economists and reflected declines in all four major U.S. regions.

The sales pace is now at the low end of the range seen over the past year, suggesting limited momentum amid a lack of affordability. Mortgage rates dipped below 7% in mid June for first time since late March, but they remain more than double their levels from the end of 2021. 

While high prices have scared off many buyers, a surge of inventory is helping affordability at the margin. The median sale price of a new home decreased 0.9% from a year ago to $417,400 in May. At the same time, the supply of available homes increased to 481,000, still the highest since 2008.

Big builders including Lennar Corp. and KB Home are trying to combat the affordability challenge by buying down customers' mortgage rates or offering price breaks, and so far the strategy has kept the builders' order books full. Both companies reported profit gains in their recently completed second quarters.

Recent data indicate overall housing demand is improving this month. The Mortgage Bankers Association's index of home-purchase applications rose for the last three weeks to the highest level since early February.

Over the long term, the US still has a shortage of new homes, Lennar Chairman Stuart Miller said last week on an earnings call, citing "over a decade of underproduction." Meantime, the supply of previously owned homes remains well below pre-pandemic levels, hampered by high borrowing costs that have discouraged sellers from listing their properties.

New-home sales are seen as a more timely measurement than purchases of previously-owned homes, which are calculated when contracts close. However, the data are volatile. The government report showed 90% confidence that the change in new-home sales ranged from a 26.8% decline to a 4.2% gain.