The Fed isn't the only area of focus out there right now. Investors are also paying attention to the latest housing news. On that front, we just got fresh data on the new home business in May. It showed:
* Sales dipped 2.5% to a seasonally adjusted annual rate of 512,000 in May from 525,000 in April (previously reported as 526,000). That was exactly in line with the average forecast of economists. Sales plunged 40.3% from 857,000 in May 2007.
* Regionally, sales fell 7.9% in the Northeast and 11.6% in the West. They inched up by 0.4% in the South and climbed 5.1% in the Midwest.
* The inventory of new homes for sale continued to fall. It dropped 1.7% to 453,000 from 461,000 in April (previously reported as 456,000). Supply is also down 16.9% from a year earlier. The "months supply at current sales pace" indicator of inventory rose to 10.9 months from 10.7 in April (previously reported as 10.6). The cycle high was 11.4 months in March.
* The median price of a new home dropped 5.1% to $231,000 from $243,500 in April (previously reported as $246,100). Prices were off 5.7% from $245,000 a year earlier.
Economists were looking for weak housing numbers, and that's exactly what they got. New home sales slumped and home prices fell, providing further evidence the spring selling season has been a disappointment. The industry is battling tighter lending standards, slumping consumer confidence, rising unemployment, and more recently, higher fixed mortgage rates.
There continues to be one bright spot in a sea of gloom, however: The raw supply of homes for sale is falling. Builders have slashed housing starts aggressively, helping pare the inventory of homes for sale to 453,000 units from a peak of 572,000 in July 2006. That's still about 125,000 units above the long-term, historical average. But you have to start somewhere, right?