U.S. new home sales fall slightly in May
Filed under: Economy
Economists surveyed by Bloomberg News had expected May new home sales to total a 365,000 annualized rate. Sales totaled a revised 344,000 annual rate in April.
Sales price decline slows
Meanwhile, the median sales price for new houses sold in May fell 7.8 percent to $221,600 from $229,300 in May 2008, the Commerce Department said. It was the smallest year-over-year decline in the median sales price registered this year. Also, the median sales price rose for the second straight month, climbing 4.2 percent, to $221,600.
A continuing bright spot: inventories of unsold new homes declined 2.3 percent in May to 292,000 or a roughly 10.2-month supply at the current sales pace. A healthy, normal new home sale market typically has a three to five month supply of new homes on the market.
Aaron Smith, a senior economist for Moody's Economy.com in West Chester, Pennsylvania, said investors, and prospective home owners for that matter, should keep an eye on interest rates for clues to where home sales and prices are headed.
"Further increases in mortgage rates would be a huge concern amid rising unemployment and falling incomes," Smith told Bloomberg News Wednesday.
In May, new home sales rose in three regions: the Northeast, up 28.6 percent; Midwest, up 18.6 percent, and West, up 1.3 percent. They fell 8.5 percent in the South.
Investors should follow the new homes sales statistic because, historically, increases in home sales are strongly correlated with increased demand and an economic expansion. That's because housing activity does not operate in vacuum. When new homes are sold, homeowners tend to buy durable goods/big ticket items for the new home: furniture, appliances, home supplies -- an uptrend in each of which is good news for the economy and bullish for the U.S. stock market.
However, government statisticians also caution that the new home sales statistic contains a margin of error, also known as a sampling error, and is subject to revisions. Further, economists note that it typically takes 3-5 months to detect a trend, so investors should not read too much into data from one month.
Housing Analysis: Again, the May decline in new home sales was so small, we're putting it in the category of "statistically insignificant": the margin of error, let alone the customary revision, could reverse the May total. Hence, the housing sector stabilization story remains in place. Along that line, and equally telling, was the median sales price trend: the annual rate of decline is decreasing, and that again, historically, has represented the sign of a housing market forming a bottom.
Reader Comments (Page 1 of 1)
6-24-2009 @ 12:17PM
Norma said...
HOW COULD OF GUESS.
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6-24-2009 @ 12:19PM
Paul said...
Have you noticed that intrest rates are almost 6%! That is not an insentive to go buy a place! Here in San Diego there is no new developement, and there is maybe one or two homes in a community for sale! No one is selling and no one is buying! But i do know alot of people that have been laid off in the last 3 weeks, this is the first time i have known anyone that lost there jobs. Now they are worried they may loose there homes!
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6-24-2009 @ 12:48PM
Trade Your Asset said...
At least by these data they're having, there's slight improvement in house selling. There's slight possibility of economic recovery in other areas.At this point in time, long terms mortgages with affordable rates should be taken into considerations so as not to add burdens to those who already have existing housing loans.
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6-24-2009 @ 1:03PM
howardg said...
What do people do with homes that are not worth nearly what was paid for them 5 or 6 years ago?
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6-24-2009 @ 1:06PM
james said...
BUFFET: ECONOMY IN 'SHAMBLES'; NO SIGNS OF RECOVERY
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6-24-2009 @ 1:07PM
two2tango22move said...
PLEASE AOL. YESTERDAY HOMES WERE UP, THE ECONOMY IS COMING BACK TODAY WE'RE IN THE TANK AGAIN. WE'VE BEEN THERE. THERE ARE NO HOMES SELLING AROUND THE COUNTRY, SHORT OR FORECLOSED LET ALONE ANYONE TRYING TO UNLOAD THEIR HOME AT A DECENT FAIR PRICE. WELL, THANK YOUR SURPREME LEADER FOR THIS AS WELL. TONIGHT ON ABC WE'LL HEAR MORE ON WHAT'S BEING DONE TO US, NOT FOR US
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6-24-2009 @ 1:43PM
ajnorthaurora said...
aren't you people that voted for Obama sorry now????
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6-24-2009 @ 2:38PM
Dan said...
The assets on the banks books, before the depression, were at about $60 trillion, and after, it was cut in half, at $30 trillion. Now the overhang of $30 is sitting on their books is what they are trying to figure out what to do with. They have two way of working it off. They can raise taxes and lower wages, remember Mexico’s bank failure 88, or let the banks go down in value. So my capitalist friends they have taken the former and your children are going to pay for it, unless you decide to go to the streets and march on the Capital. The alternatives to taxing and lowering wages are tariffs, Stet taxes, and raising the tax on the wealthy, or all of the above. Rolling the taxes back to the Reagan years on people income over $230,000 a year would not hurt them and make them invest into the American economy. The money would be to pay down the debt and invest in American manufacturing. It's up to you, it's your future, or not. If not, I suggest you start learning to speak Chinese. Go to thomhartmann.com for a ballance point of view..right and left.........
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6-24-2009 @ 2:40PM
Jessi said...
I mean is anyone really surprised about this? People as a whole are just not confident in the economic recovery and are not seeing any effects of the stimulus. Two polls taken by the Washington Post and USA Today show two different responses but also their audiences are different.
http://tinyurl.com/nqh6dh
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6-24-2009 @ 2:53PM
tjfuji said...
Now, I hear the housing market is nearly flat after I heard it was up 2.4%. Sure wish the facts where correct...it's getting diffcult to figure out the truth these days. I think it is time to shut off the media
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6-24-2009 @ 2:56PM
Dan said...
The Democratic party has been the party of the people the last 100 years. Since the Clinton years the Democratic party has swung right because the of campaign contributions from corporate America. That's why we have lost the balance between the working class and the corporations and wealthy, who now control our economic policies and trade policies. In a sence we have a one party system because at the end of the day they both cator to Corporate America, to big to fail banks, Walll Street, and every other alien that can buy a K Street lobbyist. What's the fix. Shut down K Street and make campaigns public financed. It's your country still, by the fact you still have a voice on the Internet, but I guarantee you if they can get control of this, like they have in China with our help, they will control this medium too. You need to go to the streets and change our election to public financed. go to thomhartmann.com for a ballance look at politics........
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6-24-2009 @ 2:58PM
Paul said...
ATTN: HOWARDG
In answer to your question - you do what every person who bought a house and has a morage payment should do.
WORK AND PAY YOUR MORGAGE If you could pay it four or five years ago and still have your job you you should be able to pay it now. I feel sad for those who lost their jobs and can't pay a morgage, but I have absolutely no compassion for those who bought a home with nothing down and intrest only for a length of time and now they
want to bail because their payment went up. Lenders that made these loans should go to jail. If everyone in this country was destined to own a home why would we have apartments. People today have to realize that it used to be you either had to rent and save sometimes for years in order to buy a house. In the last few years I've heard of people who work in fast food restaurants buying homes
that cost more than mine and they make a lot less money than I do. The old saying is " Money is the root of al evil",
but in reality "Credit is the root of all evil."l
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6-24-2009 @ 3:21PM
Jerry said...
I just starting looking at condos, in my zip alone there must have been 400 plus. Nobody wants to pay those big association fees.
Plus all these lease options and for sale by owner I`m seeing, I got to believe we have more then 10 months supply of homes.
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6-24-2009 @ 3:44PM
DAN said...
Join the million american citizen march on washinton to confront obama and congress. Hope 2 million show up
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6-24-2009 @ 4:29PM
Dan said...
Because of a lethal combination of soaring vacancies... declining property values... and an inability to refinance - commercial property owners are in deep, deep trouble.
And with a commercial real estate market currently valued at more than $6.5 trillion - it's easy to see why the U.S. Government is highly motivated to prevent a collapse.
A collapse of the commercial real estate market would serve as a final "death" blow to the nation's banking system (which has nearly $2 trillion worth of exposure)... crash the U.S. stock market... and effectively cripple the operating capacity of the Obama administration.
They've done a fair job of holding things together for the moment... but that's about to all come crashing down in a huge way.
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6-24-2009 @ 4:50PM
Georege said...
Interest rates will not stay down forever. I bought my first home in 1971 and the interest rate was 9.00%. I had to move in 1984 and my mortgage rate for a 30 year fixed rate loan was 12 3/4%. So if you are waiting for them to come down, they could as easily go up into the sky.
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6-24-2009 @ 5:06PM
Donovan said...
I'm going to agree with Dan regarding commercial real estate being the next to totally crash. Both by mortgage payment default, as well as in sales of commercial property.
The banks will not be able to financially handle mass commercial property mortgage payment defaults.
Reply
6-24-2009 @ 5:14PM
LARRY said...
OBAMA'S STIMULUS PLAN FAILED--OBAMA'S DOMESTIC ENERGY POLICY IS A NATIONAL SECURITY RISK---THE REST OF HIS ECONOMIC POLICIES ARE FAILING--CK HOUSING--AND OBAMA'S FOREIGN POLICY IS A POPULARITY CONTEST FOR HIM--WE CAN GET RID OF HIM -- YES WE CAN ! !
Reply
6-24-2009 @ 1:19PM
Acrylic said...
Here we go again! Barney Frank asks FANNIE and FREDDIE to relax Mortgage lending rules...
Barney Frank is the "Teflon Congressman. He was a leading opponent of regulating Fannie Mae and Freddy Mac (see video) and was able to transfer the entire blame on President Bush. He never had to answer why he fought so hard to squash regulation, was it the tons of campaign cash Frank got from Freddie and Fannie or the fact that Frank's former lover was the former director of housing initiatives for Fannie Mae.
Mon Jun 22, 2009
(Reuters) - Two U.S. Democratic lawmakers want Fannie Mae and Freddie Mac to relax recently tightened standards for mortgages on new condominiums, saying they could threaten the viability of some developments and slow the housing-market recovery, the Wall Street Journal said.