Sales of new homes declined significantly in July, and were
revised down in the previous two months. This is concerning given
the rise in mortgage rates and drop in new purchase mortgage
Specifically, new home sales dropped by a whopping 13.4% in
July, materially below consensus for a decline of 2%. Critically,
this is the largest single month retreat since volatility around
the expiration of the first time home-buyer tax credit in 2010.
All four regions of the country saw declines in sales, with the
largest percentage decrease in the West. National sales growth for
the previous two months was revised down, leaving the level of new
home sales at 394K in July (19% below consensus of 487K).
Moreover, this data is in contrast to the NAHB homebuilders
index, which came out on 8/21, and suggested more favorable
prospects for housing starts and new home sales in the coming
Worth noting, based on contract signings rather than closings,
new home sales are thought by analysts as a slightly more timely
indicator of housing activity than the existing home sales data
released earlier this week.
Separately, the stock price of the homebuilder, D.R. Horton (
), fell by 3% as a result.
XHB 29.08 -0.41 -1.39
DHI 18.73 -0.55 -2.85
SPX 1661.5 +6.75 +0.41
IXIC3122.25 +20.5 +0.66
DJIA 14990.0 +51.0 +0.34
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