New Home Sales: Decline Slightly

Bottom Line: New home sales fell slightly, compared to market expectations for an increase. Sales over the last three months have averaged 517K and are 0.7% above the 6 month average of 513K. The months supply rose modestly as sales fell and inventories rose. Average home prices continued to climb slightly relative to their year ago levels. While existing home sales last week showed strength, this new home sales data (based on contract signings rather than closings like existing home sales reports) reveals slight weakness going forward. New Home Sales FELL by 1.5% to 511k, after the prior month was revised modestly higher to 519k. This compared with market expectations for an increase to 520k, from the unrevised February level of 512k. While the trend is still rising and sales are now 5.4% ABOVE their year ago level, they are still a stunning 63.2% BELOW their July 2005 peak. The Inventory of Homes Available for Sale ROSE by 2.1% to 246k. Inventories are now 20.0% ABOVE their year ago level but still 57.0% BELOW their July 2006 peak level. Combined with the decline in sales, the Months' Supply increased to 5.8 months from 5.6 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 1.8% BELOW their year ago level and with average prices 1.0% ABOVE their year ago level. Both median and average home prices growth rate has been slowing over the past year.