New home sales show no sign of improvement though supply on the market is coming down. New home sales came in at a lower-than-expected 515,000 annual unit rate in July and, importantly, sales for June and May were both revised lower by a combined 46,000 units. Year-on-year sales, despite an easy comparison, are down 35 percent.
But new homes on the market fell 23,000 in the month to 416,000, pulling down the months' supply to 10.1 from 10.7 in June and 10.8 in May. The median sales price rose 0.3 percent in the month but is down 6.3 percent on the year. Yesterday's existing home sales report showed a 7.1 percent year-on-year decline in prices.
The housing sector remains by far the economy's central weakness and data for July offer no substantial hope that conditions are bottoming. Perhaps the best break for the housing market would be improvement in the jobs market, but high levels of jobless claims and poor job readings in this morning's consumer confidence report point to continued trouble here too.
Market Consensus Before Announcement
New home sales slipped 0.6 percent in June to an annualized 530,000 pace - down 33.2 percent from June 2007. Sales are extremely weak with the current pace at the lowest since the 524,000 for October 1991 just after the 1990-91 recession. Looking ahead, conditions are mixed with labor markets weakening but the July pending home sales index up slightly from the month before. However, the National Association of Homebuilders' housing market index indicated that buyer traffic is down. In the upcoming report, traders will be watching the inventories number. Unsold homes on the market are still high with months supply for June coming in at a bloated 10.0 months.
New home sales Consensus Forecast for July 08: 525 thousand-unit annual rate
Range: 500 thousand to 540 thousand-unit annual rate |
