Merk Investments: New Home Sales

Purchases of new homes during the month of May declined to -2.5% or 512K units for the month of May, which is line with the three-month average in the series. The median price of a new home declined to $231K and the inventory of existing stock rose to 10.9 months. On a regional basis, the sale of new homes declined in the Northeast, South and West. The only region of the country to see a net increase in purchasing was the Midwest.

The primary narrative inside the new homes series continues to be a troubling rise in inventories. Prices have not fallen sufficient to begin to clear the excessive stock in the housing sector. With 30-year rates on the upswing and lending tight, we do not see a bottom yet forming in the housing sector. In what should be one of the major months for purchasing, the net decline in activity does signal that we may see some pronounced declines in activity later this year.

Joseph Brusuelas
Merk Investments
Chief Economist/VP Global Strategy

This report was prepared by Merk Investments LLC, and reflects the current opinion of the author.  It is based upon sources and data believed to be accurate and reliable.  Opinions and forward looking statements expressed are subject to change without notice.  This information does not constitute a solicitation or an offer to buy or sell any investment product, nor provide investment advice. Merk Investments does not own any of the stocks mentioned; this is not an offer to buy or sell any security mentioned.