If you read just the CNN.com headline, it might have seemed that new home sales did really well in June (an increase of nearly 24% from May), but the reality is that new home sales are still pretty dismal. From CNN.com:
New home sales rebounded in June from the record low hit the previous month but remained sluggish.
New home sales increased 23.6% to a seasonally adjusted annual rate of 330,000 last month, up from an downwardly revised 267,000 in May, the Commerce Department reported Monday. Sales year-over-year fell 16.7%.
The June sales pace is the second slowest ever on record since the Commerce Department began tracking the data in 1963.
But it was slightly better than the annual rate of 310,000 economists were expecting, according to a consensus survey by Briefing.com.
“While the increased rate was positive, it’s a bit of a head fake based on the decline we had with May’s lower revision,” said Anika Khan, Wells Fargo economist. “And if we look at other indicators, like mortgage application volumes and builder sentiment, we can see that the housing market remains very weak.
The real reason the market seemed to rebound so aggressively was because the sales numbers in May were revised down significantly. From Calculated Risk:
Ignore all the month to previous month comparisons. May was revised down sharply and that makes the increase look significant. Here is the bottom line: this was the worst June for new home sales on record.
It may not be the positive news we all want, but we still need to look beyond just the headlines and happy talk to find out what is really going on. If a housing recovery is on the way, it certainly hasn’t arrived yet.
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Tags: Economy, housing market, new home sales, real estate
