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New Home Sales  
Released On 8/23/2012 10:00:00 AM For Jul, 2012
PriorConsensusConsensus RangeActual
New Home Sales - Level - SAAR350 K362 K340 K to 400 K372 K

Highlights
New homes are selling, up 3.6 percent in July to an annual unit rate of 372,000. This is 10,000 above the Econoday consensus and the best of the recovery outside of stimulus driven sales in the spring of 2010. July matches May's downward revised level, while offsetting the downward revision to May is an upward revision to June to 359,000.

Regional data for July are less upbeat, showing gains centered in the Northeast and Midwest which are the two smallest regions. The largest region, the South, shows a second straight monthly decline. A look at year-on-year regional sales shows the South with the smallest gain, though the gain of 9.1 percent is still very respectable.

The rise in total sales is drawing down supply, which explains the very strong readings in the monthly home builders' housing market index. Supply at the current sales rate is 4.6 months which is down from 4.8 months in June and compares with 6.7 months a year ago. Low supply of new homes points ahead to building activity and to gains for construction employment.

Yet some of the sales, probably mostly at the low end, appear to be driven by price concessions. The median price is down 2.1 percent in the month to $224,200 for a year-on-year decline of 2.5 percent. The average price is also lower, down 1.4 percent to $263,200 for a 2.6 percent year-on-year decline.

New home sales have been outperforming sales of existing homes which hit a peak right at the outset of this year. Should momentum continue to build for new home sales, and home builders think it will, confidence in the housing market as well as confidence in the economy's momentum would get a big lift. Showing little initial reaction is the Dow which should however get some support from this report.

Consensus Outlook
New home sales dropped 8.4 percent in June, but followed gains of 6.7 percent in May and 1.7 percent in April. June's decline to an annual sales rate of 350,000 was offset in part by a 13,000 upward revision to May to 382,000 which was the highest rate in more than 2 years when government programs were stimulating sales. Further offsetting the June disappointment was a 15,000 upward revision to April, now at 358,000. The dip in June sales gave a lift to the supply reading which still, at 4.9 months at the current sales rate, is very tight which is a factor that is limiting sales.

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
 
[Chart]
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
 
 

2012 Release Schedule
Released On: 1/262/243/234/245/236/257/258/239/2610/2411/2812/27
Release For: DecJanFebMarAprMayJunJulAugSepOctNov
 


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