Interest Rate Roundup

Tuesday, July 26, 2011

New home sales slip in June; Pricing weak

We just got the latest figures on new home sales from the Census Bureau. They slipped 1% to a seasonally adjusted annual rate of 312,000 in June from 315,000 in May. That was the second decline in a row and it was slightly below forecasts for a reading of 320,000 sales. Sales fell 15.8% in the Northeast and 12.7% in the West, but rose 9.5% in the Midwest and 3.4% in the South.

As for pricing, the median price of a new home rose 5.8% on the month to $235,200. That was also up 7.2% from a year ago. The raw number of new homes for sale declined to 164,000 in June, good for a 6.3 month supply at the current sales pace.

In other news, the S&P/Case-Shiller Home Price Index dropped 4.51% year-over-year in May. That was the biggest decline in 18 months. On a seasonally adjusted basis, prices in 20 top metropolitan markets fell a marginal 0.05% between April and May.

The housing market continues to fumble around without making much net progress. Sales picked up a bit in the spring, but momentum appears to be fading again. Construction activity has increased somewhat, but it still remains well below average. Home prices are stabilizing, but not really gaining back any of the ground they've lost in the past half-century.

Bottom line: Some pundits use the term "bouncing along the bottom" to describe market conditions. I like to picture a ship caught in the doldrums. It's not as bad as being swept away in a hurricane. But it isn't going to get you where you want to go!


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