WASHINGTON (AP) — Sales of new U.S. homes plunged in June, a sign that real estate continues to be a weak spot in the economy.

New home sales fell 8.1 percent last month to a seasonally adjusted annual rate of 406,000, the Commerce Department said Thursday. The report also revised down the May sales rate to 442,000 from 504,000.

Buying of new homes fell 20 percent in the Northeast, followed by less extreme declines in the Midwest, South and West. The modest sales caused the inventory of new homes on the market to increase to 5.8 months, the highest since October 2011.

The median sales price was $273,500, up 5.3 percent over the past 12 months.

“Today’s report underscores” Federal Reserve Chair Janet Yellen’s “observation in testimony last week that housing sector data still are ‘disappointing,'” said Dana Saporta, director of economic research at the bank Credit Suisse.

Home sales had been improving through the middle of 2013, only to stumble over the past 12 months due to a mix of rising prices, higher mortgage rates and meager wage growth.

The pressures from mortgage rates have eased since the start of 2014 and the pace of price increases have slowed. Still, other indicators suggest that home-buying has stalled after rebounding from lows reached during the Great Recession.

The National Association of Realtors reported that sales of existing homes increased 2.6 percent in June to a seasonally adjusted annual rate of 5.04 million homes. It marked the first time that sales have been above the 5 million-mark since October.

Economists were encouraged by the second straight monthly gain in existing home sales, though those sales are still hovering below the recent peak of 5.38 million sales hit last July.

Nasty winter storms weighed on sales of both existing and new homes in late 2013 and early 2014, making it unlikely that sales can match last year’s pace. Sales of existing homes are expected to be below the 5.1 million homes bought last year and the 5.5 million annual sales that would be consistent with a healthy housing market.

Still, there are indications that sales could pick up.

Along with the arrival of spring, average mortgage rates have dropped to 4.13 percent, from 4.53 percent at the beginning of this year, according to Freddie Mac. The rate of price gains has slowed as the inventory of homes for sale has improved. But wage growth has barely kept pace with inflation, reducing how much income people have to spend and save for down payments.