New Home Sales Sputter in June - July 25, 2012
Sales of new single-family homes came in at a seasonally adjusted annualized rate of 350,000 units in June, according to estimates issued by the Commerce Department. That was below the upwardly revised annualized rate of 382,000 homes sold in May. Initially, the May estimate had been 369,000. Expectations among analysts had been for an annual sales rate of 375,000 homes last month. So, this was a somewhat disappointing metric, and affirms the uneven pace of the slowly evolving housing recovery.
All told, the June estimate of 350,000 homes sold was the second lowest level of the year so far, eclipsing only the January total of 339,000 homes sold on an annual basis. May's 382,000 units was the highest so far this year.
On the other hand, the latest monthly sales total was well up from a year earlier, when just 304,000 homes had been sold, further attesting to the better aggregate tone of this core industry, even with the aforementioned unevenness. The latest pattern also is in line with the sales trend for existing residences, where we saw some modest month-to-month slippage in June, but also a hefty year-to-year gain.
Meanwhile, the median price of a new home fell 3.2% in June from the same month a year ago, to a price of $232,600. This reverses a generally upward slope in home prices, and underscores still further the lingering weakness in the aftermath of an unprecedented collapse in this pivotal economic sector that began during the middle stages of the last decade. New home sales, for example, peaked in July of 2005, when sales approached 1.4 million units on an annual basis. The drop from that unsustainably high level was furious, with sales reaching a nadir last year, when volume briefly dropped below 300,000.
Encouragingly, though, inventories continue to shrink, with the number of new homes listed for sale easing to 144,000 at the end of June. That is a supply that would take just 4.9 months to deplete at the current sales pace. An inventory level of six months, or so, is considered to be healthy.
Finally, sales were down in two of the nation's four regions last month, falling in the Northeast and the South, but rising in the Midwest and the West. All in all, this was a mildly disturbing report, but not one that suggests the nascent housing recovery is at risk, barring a series of major setbacks on the employment front.
At the time of this article’s writing, the author did not have positions in any of the companies mentioned.