New Home Sales: Surprise Decline Amid Several Months of Volatility

Bottom Line: New home sales were less than expected as June saw a sharp retreat from the surprise strength in May. Sales over the last three months have averaged 646K and are 0.8% below the 6 month average of 651K. With these averages still above the 12-month average and well above the 2017 average , we can say the trend remains upward for overall new home activity, but that it is losing momentum. The months supply rose moderately as sales fell and inventories rose. New home prices continued to climb relative to their year ago levels but were lower on the month as the composition of sales skewed slightly towards lower priced homes in June. New Home Sales FELL by 5.3% to 631k, after the prior month was revised lower to 666k. This compared with market expectations for a decline to 668k, from the unrevised May level of 689k. Sales are now 2.4% ABOVE their year ago level, -- but they are still 54.6% BELOW their July 2005 peak. The Inventory of Homes Available for Sale ROSE by 1.7% to 301k. Inventories are now 10.3% ABOVE their year ago level but still 47.4% BELOW their July 2006 peak level. Combined with the decline in sales, the Months' Supply increased to 5.7 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 FELL with median prices 4.2% BELOW their year ago level and with average prices 2.0% BELOW their year ago level.