Sales of newly built, single-family homes in the U.S. dropped 6.8% in June from the month before to a seasonally adjusted annual rate of 482,000 units, according a Commerce Department report released Friday.

The rate is the lowest in seven months, while May's sales pace was revised down from a 2.2% gain to a 1.1% decline and to 517,000 units from the previously reported 546,000 units.

Despite the drop, June’s performance was 18.1% better than the same time a year ago.

“We knew that there would be ups and downs on the road back to a normal housing market,” said NAHB Senior Economist Robert Denk. “As the economy and job growth strengthens, we expect to see gradual, continued momentum in the coming months.”

Regionally, home sales rose by 28% in the Northeast. The Midwest, South and West posted respective declines of 11.1%, 4.1% and 17%.

Despite the June downturn, the housing market has been looking better lately, with sales of existing homes last month hitting an eight-year high and the number of new building permits issued near the same level.

“The plunge in June new home sales, coupled with net downward revisions to previous month’s activity, has undermined much of the momentum reported in the earlier part of the year and returning sales to sub-January levels,” said Stiefel Fixed Income Chief Economist Lindsey Piegza. “While new home sales continue to improve, the pace of improvement now remains much more subtle.

"Nevertheless, a more subdued pace of recovery is still a recovery and, coupled with continued improvement in existing home sales, housing remains a point of particular strength relative to the still-lackluster activity levels in other sectors of the economy such as household spending and business investment. “

She said while housing is no longer the driver of the economy, it has been a consistent, positive contribution to growth and is expected be singled out as a sign of improving economic conditions as the U.S. Federal Reserve is believed to be moving closer to increasing short term interest rates.

Manufacturing rebound?

Meantime, a first look for this month at the beleaguered U.S. manufacturing industry shows a rebound, according to the financial information services provider Markit.

Its preliminary Flash U.S. Manufacturing Purchasing Managers’ Index edged up to a reading 53.8, from a 20-month low of 53.6 in June. The latest reading was comfortably above the 50 neutral level, although still slightly weaker than the post-Great Recession average of 54.3.

A rebound in overall growth momentum largely reflected stronger increases in output and new business levels in July, according to the report. Softer job creation was the main factor weighing on the headline PMI during the latest survey.

Manufacturing production volumes increased at a robust and accelerated pace in July. Reports from survey respondents also cited improving domestic economic conditions and a general upturn in client demand. That said, some manufacturers noted that reduced capital spending within the energy sector continued to act as a drag on sales.

Companies saw output and order book growth regain a little momentum at the start of the third quarter, but the overall pace of expansion was nevertheless the second-weakest seen since the government shutdown of 2013, according to Chris Williamson, chief economist at Markit.

“Manufacturing has been stuck in a lower gear in recent months compared to the strong expansion seen through much of last year, linked to weak exports and uncertainty about the economic outlook at home and abroad,” he said. “Although export orders showed the first rise since February, the rise was only very modest, blamed by companies on the appreciation of the dollar and sluggish global demand.