The numbers: Sales of new homes in the U.S. fell in June to the lowest level since the first month of the U.S. coronavirus pandemic in early 2020, as high prices and a limited selection frustrated scores of would-be buyers.

New home sales dropped 6.6% to an annual rate of 676,000, the government said Monday. That’s how many homes would be sold in a year if the same number were bought in each month as they were in June.

The decline in sales was much larger than Wall Street had expected. Economists polled by the Wall Street Journal forecast an annual sales rate of 795,000.

New home sales had leaped in January to the highest level in almost 15 years — an almost 1 million annual rate — as buyers took advantage of record-low mortgages rates. Yet sales have fallen since them because of high costs and a shortage of homes for sale.

The big picture: Plenty of people want to buy homes, but high prices and a limited selection are the biggest obstacles. The cost of raw materials such as lumber are much higher than they were a year ago and builders can’t find enough carpenters, bricklayers and other skilled craftsmen to do the work.

These problems are expected to act as a drag on the housing market for months to come. Not only that, but it’s also preventing many home owners from selling their current homes because they might not have another home to move into.

Market reaction: The Dow Jones Industrial Average

 and S&P 500 index

fell in Monday trades.

Major homebuilder stocks such as D.R. Horton
Lennar Corp.

and PulteGroup

also fell, although all three stocks were near multi-year highs.

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