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 8/24/07 For Jul 2007 | ||||||||||||
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Highlights
New home sales edged higher in July to a better-than-expected annual rate of 870,000, up 2.8 percent from a slightly upward revised June rate of 846,000. Year-on-year sales were down 10.2 percent in the month, still in the double digits but much better than June's 21.2 percent year-on-year decline. The South, where new home sales are concentrated, showed a 0.6 percent month-to-month improvement, while in the West, the second busiest region, sales jumped 22.4 percent. The Midwest was little changed but the Northeast showed a sharp decline.
Supply on the market edged back slightly to 7.5 months from 7.7 months, a still swollen level that will keep builders on the defensive. Rising 3.9 percent to $239,500 was the median price, likely skewed higher by fewer sales of lower priced homes, the result of tightened lending standards. Year-on-year, the median price is up 0.6 percent.
The dollar and stocks rose while Treasuries eased in immediate reaction to the data, which will likely improve expectations for Monday's existing homes sales report. But one's month improvement in one set of data won't shift the outlook for the housing sector where stabilization isn't expected until sometime in 2008.
New home sales fell 6.6 percent in June, following a 2.2 percent decline the month before. Pending home sales rose 5.0 percent in June but it is hard to translate this given the tightening in lending standards. Home builders desperately want to see some leveling off in sales and improvement in backlogs. Housing is swollen with supply, at 7.8 months for new homes and 8.8 months for existing homes. Prices are holding up a little better. The median price for a new home did fall 1.3 percent in the month to $237,900 but is only down 2.2 percent year-on-year. But this is likely a statistical artifact of fewer low end homes being sold as a percentage of the total.
New home sales Consensus Forecast for July 07: 0.820 million-unit rate
Range: 0.770 million to 0.840 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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