New home sales bounce in June
* New home sales rose 23.6% to a seasonally adjusted annual rate of 330,000. That topped the average estimate of 310,000 units. Sounds like a big rise ... until you see that the previous month's sales were revised sharply lower to 267,000. A net 62,000 homes were actually lopped off the sales tally for the past three months, and the June number was still the second-worst reading on record.
* Regionally, sales were up in three out of four locations. The Northeast showed the biggest gain at 46.4%, followed by the South at 33.1%. Sales rose 20.5% in the Midwest, but dropped 6.6% in the West.
* The number of homes for sale dipped to 210,000 from 213,000 in May. That's the lowest level in any month going all the way back to September 1968. The months supply at current sales pace indicator of inventory slipped to 7.6 from 9.6. The median price of a new home slipped 1.4% to $213,400 from $216,400 in May.
New home sales picked up a bit in June. But it was still the second-worst month in U.S. history. Moreover, revisions to previous reports show home sales have been running at even more depressed levels than we thought. That makes it hard to get too excited about these figures.
If there's a bright spot, it's that new home inventories remain extraordinarily lean. We have fewer houses looking for buyers than we've had at any point in the last 42 years. But even that ostensibly good news comes with an asterisk. Because we have so much competition from the distressed, "used" home market, home builders aren't able to ramp up pricing in response. All in, I expect the housing market to remain challenging for some time, especially given the ongoing weakness we're seeing in the labor market.