New home sales measure the number of newly constructed homes with a committed sale during the month. The level of new home sales indicates housing market trends and, in turn, economic momentum and consumer purchases of furniture and appliances. Why Investors Care
| Released on 6/26/07 For May 2007 | ||||||||||||
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Highlights
New home sales data for May won't improve confidence for stability in the housing sector, which is now being hit by higher mortgage rates and new sub-prime problems. New homes sold at a lower-than-expected 915,000 annual rate with data for April and March showing a combined and sizable downward revision of 68,000. Sales fell 1.6 percent on the month for a still heavy 15.8 percent year-on-year decline.
Supply on the market, closely watched by builders, rose 1 tenth to 7.1 months -- not a favorable sign. But the heavy supply hasn't further hurt prices which rose 1.5 percent on the month to a median $236,100. The year-on-year comparison is down only 0.9 percent, well up from prior readings.
Yesterday's existing home data were similar in tone to this report, suggesting continuing but not dramatic weakness. Financial markets showed little initial reaction to this report. Keep an eye out for changes in interest rates and whether they will help or hurt future demand. Next data on the housing sector will be construction spending on Friday.
New home sales showed more strength in April than existing home sales, jumping 16 percent to an annual unit rate of 981,000. Improvement was centered in the South where sales jumped 28 percent. Importantly, supply fell to 6.5 months from 8.1 in March. Apparently, builders are waiting on a sustained improvement in supply before pushing new construction.
New home sales Consensus Forecast for May 07: 0.920 million-unit rate
Range: 0.850 million to 0.990 million-unit rate
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There is no question that lower interest rates boost home sales. Other factors also impact housing decisisions, such as employment and income growth, and wealth stemming from stock market gains. |
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