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New Home Sales: Modest Declines in August After Strong July

September 26, 2016

Bottom Line: After sharp gains in July, New Home Sales retraced modestly in August, falling to 609k, down from 659k (revised from 654k). The months' supply rose moderately as sales fell and inventories rose. Price gains have moderated, as the median selling price is now down 5% from a year ago. But the 3-, 6- and 12-month averages are still above 2015's levels, so there is no clear turn yet in the trend of appreciation, just a slowing of the pace of gains. This could also indicate builders are focusing on lower-cost, entry-level homes.

New Home Sales FELL by 7.6% to 609k, after the prior month was revised modestly higher to 659k. This compared with market expectations for a decline to 600k, from the unrevised July level of 654k. The trend is rising and sales are now 20.6% ABOVE their year ago level, -- but they are still 56.2% BELOW their July 2005 peak.

The Inventory of Homes Available for Sale ROSE by 1.7% to 235k. Inventories are now 8.3% ABOVE their year ago level but still 58.9% BELOW their July 2006 peak level.

Combined with the decline in sales, the Months' Supply increased to 4.6 months from 4.2 months. This is modestly BELOW a normal level of 6.0 months and well BELOW its peak of 12.2 in January 2009.

Home Prices were MIXED with median prices 5.4% BELOW their year ago level and with average prices 1.4% ABOVE their year ago level.

Article by Contingent Macro Advisors