U.S. new home sales dropped by 8.4% to a 350,000 annualized unit rate in June. This was much weaker than the 369,000 unit rate expected by consensus and our 360,000 unit forecast. However, it comes after the prior three months were upwardly revised to add another 33,000 units to total sales. May sales, in particular, were upwardly revised to a two-year high of 382,000 units (previously reported 369,000). The Northeast saw the largest 60% month-over-month drop in June, while the South saw a 8.6% drop. The Midwest and the West saw 14.6% and 2.1% month-over-month gains, respectively. On a year-over-year basis, sales in the Northeast are flat, all other regions posted gains. The months’ supply of unsold inventory ticked up to 4.9 months from 4.5 months in May, though still well below double-digit territory seen during the recession. The median sales price fell 1.9% to $232,600 in June and is down by 3.2% over June 2011 prices. While the headline reading was a disappointment, the upward revision help offset the bad news. Still, it will likely have a modest impact on markets, as news from Europe continue to dominate investor attention today.