Merk Investments: New Home Sales-June 2008
New home sales for the month of June fell to 530K on the back of an upward revision in the May data to 533K. The data series saw a net upward revision of 50K units over the past three months, which what seemed to be a very sharp downward turn in the market to start the New Year. Inventories fell to 10.0 months and the median price increased to $230K, which is down -2.0% y/y. Inventories declined to 10.0 months and the total number of homes for sales stands at 426K down from 450K during the previous month. On a regional basis the purchase of new homes advanced 5.3% in the Northeast and 2.5% in the Midwest. However, sales declined -2.0% in the South and -0.9% in the West.
The June data along with the upward tilt in the revisions to the data since February provided the first bit of good news in the new homes series in quite some time. There does appear to be based on our interaction with the development community some traction gained in the market through the use of health mix of incentives and price reductions to begin working off an inventory level that is still far to high to make any claim regarding stabilization of the market. While we are not ready to call a bottom in the market based on a decent month of data that traditionally is one of the stronger months of purchasing activity of the year, it does appear that the steep declines in the market may be behind us with a several volatile months purchasing activity ahead before stabilization can set in.
Joseph Brusuelas
Merk Investments
Chief Economist/VP Global Strategy
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