New Home Sales Fall, but Beat Expectations

Strong upward revisions by the Commerce Department to new-home sales for the past three months helped power a much smaller-than-expected drop in sales activity for June, according to data released Friday morning. New-home sales fell 0.6 percent to a seasonally-adjusted annual rate of 530,000 — well above the 501,000 pace expected by economists surveyed by MarketWatch, and the 503,000 pace expected in a similar Bloomberg News survey. New-home sales in May were revised to a 533,000 level, compared with the previous estimate of 512,000; sales remained well above the cycle-low of 513,000 that was set in March, suggesting at least that that the bottom hasn’t fallen completely out of the market for newly-built homes. Inventory fell in June by the most in four decades, signaling that builders may be making headway in pulling back on building activity; months’ supply of homes on the market fell slightly to 10 months in June from 10.4 months in May, but seasonally-adjusted inventory declined to 426,000 from 450,00 in May. Given the substantial revisions to previous months numbers, it’s well worth noting here that the confidence interval on June’s new-home sales numbers is large, and this month’s total could similarly be significantly revised in either direction. The Commerce Dept. said that the 0.6 percent gain had an error range of plus or minus 11.3 percent — meaning the real numbers could be somewhere between a 10.7 percent drop and an 11.9 percent gain. That said, portions of Wall Street clearly took some heart in the better-than-expected new-home sales numbers. The Dow Jones Industrial Average was at 11,398.30, up 49 points, when this story was published, after falling more than 280 points on Thursday. Much of the financial sector, however, was not yet participating in the slightly positive trading Friday morning: every stock tracked by HW, including bond and mortgage insurers, commercial and Wall Street banks, and REITs, was trading down when this story was published. The new home sales data comes on the heels of a National Association of Realtors report Thursday that found sales of existing homes had dropped by 2.6 percent in June to a seasonally-adjusted annual rate of 4.86 million units, the slowest pace in a decade. Existing home sales represent the bulk of sales transactions throughout the housing market. Related links: new residential sales report