New Home Sales Jump 9.4% in July
Data suggesting that the economy is stabilizing continues to pile in this week, most recently in the housing market. New Home Sales advanced by 9.6% in July, beating expectations for a 5% increase and following up on a 9.1% advance in the prior month.
July marks the fourth consecutive monthly increase, pushing the annual pace of sales to 433,000 — the first time same sales have passed the 400k mark since October. The annual rate is still 13.4% below the pace in July 2008, yet that compares nicely with the 19.1% annual decline reported in June.
“This report was surprisingly strong, and helps to further the story that the U.S. housing market has now reached a stabilization point,” said Ian Pollick, strategist at TD Securities. He added that “housing conditions remain favorable due to low mortgage rates, deep discounts and a rosier economic outlook.”
Excess overhang also got slashed by an entire month’s worth. At the current sales pace there are 7.5 months worth of inventory on the market, compared with 8.5 months in June. Overhang peaked in January at 12.1 months, and then fell in four of the past five months.
According to analysts at RDQ, the number of unsold new homes, in absolute numbers, is the lowest since March 1993.
The report carried plenty of revisions, but all were positive. The sales pace in June was revised up 11k to 395k, while May is now 362k (from 346k), and April is now 345k (from 338k).
“The fact that there were upward revisions to the prior three months and July's gain is the fourth in a row speaks volumes to the housing recovery,” commented Jennifer Lee from BMO.
Sales in the Northeast advanced by nearly one-third (32.4%), while sales in the South climbed 16.2%, and sales in the West inched up 1%. In the Midwest, however, sales dropped 7.6%.
As for housing prices, the median during the month was $210,100, about equivalent to the figure in June and broadly in line with prices seen in 2009.
Market reaction was immediate: equities were unmoved earlier in the morning when Durable Goods posted a positive, albeit lopsided, surprise. But minutes after the housing data all three major indexes jumped forward into the green.
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