New home sales up, but sales remain slow
Molly Riley / REUTERS
Sales of new U.S. single-family homes rebounded in June from the prior month's record low.
msnbc.com staff and news service reports
updated
7/26/2010 2:52:14 PM ET
For those seeking hope in the better-than-expected 23.6 percent
jump in new home sales in June: it's only one month's data, it's from a
deep low in May, and the sales pace remains near the lowest since
records started being kept when John F. Kennedy occupied the White
House.
The housing market still faces an array of challenges, not least of
which is persistent joblessness with almost 15 million Americans out of
work. People remain reluctant to spend, despite record low interest rates, and banks remain reluctant to lend.
"From our perspective, with the unemployment rate still very high, a
lack of demand for mortgages and banks not willing to make significant
mortgage loans at this point, you are looking at a very moribund home
sales market. That is true whether you are looking at the new or
existing home sales space. We see it continuing to hover right here near
the lows," said Tom Porcelli, senior market economist at RBC Capital Markets.
The Commerce Department said Monday sales jumped 23.6 percent to a
330,000 unit annual rate from a downwardly revised 267,000 units in May.
The sales pace last month was the second lowest since records started
in 1963.
But the percentage increase was the largest rise since May 1980, and
partially unwound the prior month's historic 36.7 percent decline. And
the jump was better than expected. Analysts polled by Reuters had
forecast new home sales rising to a 320,000 unit pace last month from
May's previously reported 300,000 units.
"It was better than expected on the headline but you would be doing
yourself a disservice if you didn't notice that there was also a
significant downward revision to the prior month. So if you average the
last couple of months you are looking at a run rate of about 300,000,
which is basically near an all-time low," Porcelli said, warning people
not to get caught up in the headline.
"You have to look at the overall report, and what you notice from
that is there is not a lot of activity going on in the new homes sales
space," he said.