MT Insider: US Economics - July New Home Sales Decline 13.5%, Largest Retreat Since Expiration of Tax Credit in 2010


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 applications.

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 months.

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 ( DHI ), 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

The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of The NASDAQ OMX Group, Inc.

Copyright (C) 2014 All rights reserved. Unauthorized reproduction is strictly prohibited.

This article appears in: Investing , Commodities

Referenced Stocks: DHI

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