May New Home Sales, a measure of contract signings of new homes, totaled 342k annualized, 18k less than expected and down a touch from 344k in April. Mortgage rates remained below 5% for most of the month so this data doesn’t reflect the recent rise but it does take into account the government’s $8,000 home purchase tax credit for first time buyers and the California $10,000 tax credit for buyers of new homes. Purchases in the West however rose by only 1000 as foreclosure sales remain stiff competition for builders. The same in the South where sales fell by 17k. The Northeast rose by 6k and the Midwest rose by 8k. Months supply fell to 10.2 from 10.4 to the lowest since July ’08 but still remains well above the 30 year average of 6 months. The absolute # of new homes for sale did fall to the lowest since ’01. The median price rose 4.2% m/o/m and is down 3.4% y/o/y and is off 15.6% from its July ’07 high. Net-net, new homes make up a small part of the market where existing homes with foreclosures are making up a bigger and bigger portion but the drop in months supply and rise in prices are the focus of homebuilder investors.
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