New Home Sales Struggling To Gain Traction

Behind the usual volatility of monthly sales rates, new home sales much like existing home sales are struggling to gain traction. July's annual sales rate of 635,000 is slightly below Econoday's 645,000 consensus but is upstaged by a very sharp upward revision to June which is now, pending further revisions, at a 728,000 rate and a new expansion high. Yet the three-month average, which is central when discussing home sales, actually declined in July, to 655,000 versus 663,000 in June. This average peaked at roughly 670,000 in March and April, which were the best months so far this year for home sales.

A clear positive in the July report is a rise in supply as new homes come into the market, up 1.2 percent to 337,000 and, relative to sales, at an ample 6.4 months. This will provide buyers with greater choices. Another positive, this one for home builders, is a 2.2 percent monthly rise in the median price, at $312,800 yet still down 4.5 percent on the year. In contrast, sales are up 4.3 percent versus July last year in a comparison that doesn't point to much further price traction ahead.

Lower mortgage rates combined with strong demand in the jobs market are concrete positives for housing which, despite ups and downs, may still in the end be a positive contributor to the 2019 economy.