While the number of new home sales reported earlier beat consensus expectations, coming in at 546K above the estimated 523K, driven mostly by another curious surge in Northeast sales (up 88% from April) where something is clearly afoot following the recent historic outlier in housing permits as shown a week ago...
... the reality is that, as a long-term of New Home Sales shows, this series is still at recession levels, and even at the better than expected print of 546K, this the same as a level last seen in 1992.
What is the reason for the non-existent rebound? Simple: the following chart comparing total new home sales and the median new home sales price explains it.
Because while the US housing market suffered a depression-level collapse after the housing bubble burst in 2006, median new home prices had a modest dip and proceeded to levitate to new record highs without interruption until the last few months of 2014, when they hit an all time high of just over $300,000. Since then they have fallen to $282,800 but clearly they have a long way to go to match the implied supply/demand dynamics seen the last time housing sales were at this level. In fact, one can say that new home prices are about 3 times higher than where they should be to promote a housing recovery for "the rest of us" and not just Chinese "investors" and foreign oligarchs (who are buying existing homes anyway instead of new homes).
This also means that despite the "best efforts" of the Fed and the government to blow yet another housing bubble, this has proven far more difficult than reflating the stock bubble. And as a result of the failure of fiscal and monetary policy to trickle down to the common man, there is far less demand for new housing at these prices and hence, far less supply.
Until and unless prices tumble far more to where new homes are affordable for most, the unprecedented failure of new home sales to pick up in line with the general "recovery" will continue. It will also mean that most Americans will be destined for a life of renting instead of owning, something we already know courtesy of the latest homeownership rate plunging to multi-decade lows...
... which means that rental prices across the US will continue rising to new record highs with every passing quarter.