New home sales for June look awful
* Sales tanked 6.6% to a seasonally adjusted annual rate of 834,000 from a revised 893,000 SAAR in May (previously reported as 915,000). That was worse than economists' forecasts for a 2.7% decline to 890,000. On a year-over-year basis, June sales were down 22.3% from 1.073 million in June 2006.
* For-sale inventory came in at 537,000 new homes. That was unchanged from 537,000 in May (previously reported as 536,000) and down 5% from 565,000 in June 2006. On a months supply at current sales pace basis, inventory was 7.8 months, up from 7.4 in May (previously reported as 7.1) and 6.4 a year earlier.
* Median prices fell 1.3% to $237,900 in June from $241,000 in May (previously reported as $236,100). Prices were down 2.2% from $243,200 in June 2006.
There isn't much to like about these numbers. We saw another sharp drop in sales and another decline in median prices. Moreover, the raw number of homes for sale was unchanged and the months supply indicator popped up again. Clearly, home builders are struggling for business in a changed housing market. We'll need to see prices come down, incentives pick up, and construction activity cool to get supply more in line with demand, and to overcome the headwinds from a tighter mortgage market.