New Home Sales Rise In July

New home sales rose solidly in July from a downdraft in June, up 5.4 percent to a 507,000 annual pace. Year-on-year, sales have surged, up 26 percent. The strength in sales has thinned an already tight market where supply is at 5.2 months, down from 5.3 months in June and compared with 6.1 months a year ago.

Regional data show a surge for the Northeast where, however, readings are skewed by very low sales rates. Still, the Northeast is out front with a year-on-year gain of 39 percent followed by the West at 30 percent and the South, which is much bigger than all the other regions combined, at a very strong 29 percent. The Midwest is lagging at no change.

Price data are of special interest given signs of weakness in this morning's FHFA and Case-Shiller reports. And here the story is much the same. Though the median price did rise 3.0 percent in the month to $285,900, the year-on-year gain, however, is only 2.0 percent which is a tiny fraction of the sales gain.

Though prices may not be soaring, supply is low and rates are low which should continue to encourage builders to enter the market. The housing sector may not be soaring, but it is a center of strength for the economy.

Recent History Of This Indicator:
New home sales have been flat this year in contrast to existing home sales which are strong. But new home sales are expected to rebound a very sizable 7.1 percent in July to an annual rate of 516,000. Note that month-to-month readings in this report can be very volatile.