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New Home Sales:  Losing Upward Momentum

July 26, 2017

Bottom Line: New home sales rose less than expected. Sales over the last three months have averaged 597K and are 1.6% below the 6 month average of 607K. Inventories rose modestly more than sales, but the market still remains historically tight. Existing home sales showed some signs of slowing as supply of affordable homes remains tight -- and this new home sales data (based on contract signings rather than closings like existing home sales reports) suggest the trend is losing upward momentum.

New Home Sales ROSE by 0.8% to 610k, after the prior month was revised lower to 605k. This compared with market expectations for an increase to 615k, from the unrevised May level of 610k. Sales are now 9.1% ABOVE their year ago level, -- but they are still 56.1% BELOW their July 2005 peak.

The Inventory of Homes Available for Sale ROSE by 1.1% to 272k. Inventories are now 11.9% ABOVE their year ago level but still 52.4% BELOW their July 2006 peak level. Combined with the increase in sales, the Months' Supply increased to 5.4 months from 5.3 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 3.4% BELOW their year ago level and with average prices 4.2% ABOVE their year ago level.

Article by Contingent Macro Advisors