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New Home Sales:  Sharp Decline As Sales in West Fall

August 23, 2017

Bottom Line: New home sales fell sharply in July, missing expectations. Sales in both the West and Northeast fell by over 20% on the month. While sales have been volatile in the last 6-months, the trend is now slowing modestly with the last three months averaging 606k, below the 6-month average of 610k. The first seven months of 2017 have averaged 609k, still 8.8% above that of 2016. Overall, with new home prices 6% above median levels last year, housing affordability is increasingly an issue that has so far caused only a modest deceleration in housing activity.

New Home Sales FELL by 9.4% to 571k, after the prior month was revised higher to 630k. This compared with market expectations for a decline to 610k, from the unrevised June level of 610k. Sales are now 8.9% BELOW their year ago level, -- and they are still 58.9% BELOW their July 2005 peak.

The Inventory of Homes Available for Sale ROSE by 1.5% to 276k. Inventories are now 16.5% ABOVE their year ago level but still 51.7% BELOW their July 2006 peak level.

Combined with the decline in sales, the Months' Supply increased to 5.8 months from 5.2 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 ROSE with median prices 6.3% ABOVE their year ago level and with average prices 4.6% ABOVE their year ago level.

Article by Contingent Macro Advisors