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 7/25/08 For Jun 2008 | ||||||||||||
| ||||||||||||
Highlights
The new home sales report is largely positive, in contrast to yesterday's very weak report on existing home sales and offering a reason for hope in the sector. Annual unit sales of new homes came in at a 530,000 rate for June, down 0.6 percent in the month but against a nicely upward revised 533,000 rate in May (512,000 originally reported). April was also revised upward (542,000 vs. an initial 525,000). Year-on-year contraction is still very steep but, reflecting steady levels and ever-easier comparisons, is now down at least in the low end of the 30 percent range at 33.2 percent. By regions, sales were strongest in the Northeast with the South and West both showing slight declines.
There are fewer new homes sitting on the market, at 426,000 in June vs. 450,000 in May. Supply at the current sales rate fell to 10.0 months, still very bloated but down from 10.4 months in May and 10.3 months in April. Prices are another positive, rising 1.4 percent in the month to a median $230,900 and down only 2.0 percent year-on-year -- an improvement from the mid-single digit percentage declines of prior months.
If the housing sector does begin to recover, we can look back at this report as the first signal of improvement. But again existing home sales are very weak as are indications from home builders who are reporting record low customer traffic. The economic data have been very good this morning, starting off with durable goods orders then consumer sentiment and now new home sales.
New home sales continue to fall further into recessionary levels. Sales fell 2.5 percent in May to an annualized sales rate of only 512,000 units. Sales levels are lower than during the 2001 recession and are comparable to the sales pace during portions of the recessions of 1990-91, 1981-82, 1980, 1973-74, and 1970. New home prices, which have held up better than prices for existing homes, finally started to give in, falling 5.1 percent in May to a median $231,000 and down 5.7 percent year-on-year. The months' supply on the market worsened to 10.9 months from 10.7 months in April.
New home sales Consensus Forecast for June 08: 505 thousand-unit annual rate
Range: 490 thousand to 520 thousand-unit annual rate
![[Chart]](chart.gif)
|
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. |
| 2008 Release Schedule | ||||||||||||||||||||||||||
|
powered by
![[Econoday]](../../../../../../../../../images/logo.gif){kind=logo}