New Home Sales Drop To Lowest Since March As Northeast Craters; Biggest Supply Since October 2011
Following last week's housing starts data, everyone was expecting a new home sales number that was even better than the consensus 430K. Instead, the July print of 412K was not only the 5th miss in the last 6 prints, but also the lowest number since March's 403K. The biggest drop took place in the Northeast where the sequential plunge was some 31% to just 18K new houses, and a whopping 44% from a year ago. There were declines in the Midwest which dropped 8.8% and in the West, which dropped 15.2%, while the only increase was recorded in the South which rose 8.1%. In fact, of all regions, only the South posted an increase from July 2013, surging by 33%, with new home sales in all other regions dropping.
Other notable data: the median home price dropped by 3.7%, the biggest drop since May 2013, and down to February 2014 levels:
Finally, and perhaps most troubling, the months supply of new homes rose to 6.0, the highest since September 2011, as a result of 121K homes under construction the most in years, while 37K new homes have not even been started: also the highest number in years as builders seem to have frontrun the "recovery" once again. All this suggests that there has been an inflection point in the supply which can not be absorbed by the market, which also means median prices are likely to drop in the coming months.
All in all, just the right mix of bad news to send the S&P 500 to 2,000.
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