Home Ownership: Popular, But Not Good Investment...

[Waqar Quraishi]

New Home Sales
Released on 7/26/2011 10:00:00 AM For Jun, 2011
Prior Consensus Consensus Range Actual
New Home Sales - Level - SAAR 319 K 321 K 309 K to 342 K 312 K
Highlights

Like last week's report on existing home sales, today's report on new home sales shows weakness but also surprising price strength. New home sales fell 1.0 percent in June to an annual rate of 312,000 vs expectations for 321,000. Upward revisions of 13,000 to May and April are an offset. Price strength is also an offset with the median up 5.8 percent to $235,200 and the average price up 1.8 percent to $269,000. Year-on-year rates jump into the positive ground in June, up plus 7.2 percent for the median price and up 4.8 percent for the average.

Supply eased a bit, to 6.3 months at June's sales rate vs 6.4 and 6.5 in the two prior months. Total homes for sales are 164,000, down 3,000 in the month and a new low in nearly 50 years of data.

The housing sector is still scrapping along the bottom but June's indications of price strength are positive. But these indications are tentative and will have to be confirmed in the coming reports before any conclusions can be drawn. Next data on the housing sector will be pending home sales on Thursday which will be very closely watched.

Market Consensus Before Announcement
New home sales fell 2.1 percent in May to a 319,000 annualized pace. Supply in terms of months dipped slightly to 6.2 months from 6.3 in April and from 6.9 in March. Supply in terms of the number of homes on the market, down 6,000 to 166,000, has never been lower in nearly 50 years of data. Low supply is a plus for prices which may be firming, up 2.6 percent to a median $222,600.

Definition
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

There is no question that lower interest rates boost home sales. Other factors also impact housing decisions, such as employment and income growth, and wealth stemming from stock market gains.
Data Source: Haver Analytics

2011 Release Schedule
Released On: 1/26 2/24 3/23 4/25 5/24 6/23 7/26 8/23 9/26 10/26 11/28 12/23
Released For: Dec Jan Feb Mar Apr May Jun Jul Aug Sep Oct Nov