Sales of new homes jumped unexpectedly during July, beating analyst estimates by a long shot. Sales volume was still down relative to year-ago levels, however -- a comparison that HW readers know I place more weight on. From the Commerce Department:
Sales of new one-family houses in July 2007 were at a seasonally adjusted annual rate of 870,000, according to estimates released jointly today by the U.S. Census Bureau and the Department of Housing and Urban Development. This is 2.8 percent (±12.0%) above the revised June rate of 846,000 and is 10.2 percent (±12.3%) below the July 2006 estimate of 969,000.
It's important to note the standard errors being reported above, since they suggest that both the monthly and yearly movements are directional only and not statistically significant. It's also important to note that the reported sales number covers contract signings only and does not account for cancellations. Nonetheless, the sales number exceeded the highest estimate made by 74 economists polled by Bloomberg ahead of the release. Bloomberg's coverage did note that future drops are likely going forward:
"This is July data and this is referencing a period before the seizure in credit markets," said Zoltan Pozsar, senior economist at Moody's in West Chester, Pennsylvania, who forecast a gain of 850,000. "There are more declines to come. We'll probably hit a bottom in sales towards the end of this year."
(Seriously, someone named their kid Zoltan?) In terms of prices, the Commerce Department reported that the median price for new homes in July was $239,500, with a mean of $300,800 -- the median price was up 0.6 percent compared with a year earlier, but is often taken with a grain of salt given its susceptibility to shifts in geographic mix. Calculated Risk further notes that the price data above does not account for builder incentives, which have clearly been on the rise as of late.