New Home Sales Unexpectedly Strengthened in July

July new home sales bounced back in July, growing +2.8% MoM (consensus -1.7%), and the supply of homes fell to 7.5 months from 7.7 months in June. In addition, new home sales in June were revised higher, to create only a 4% drop rather than the originally reported decline of -6.6% MoM. Sales rose substantially in the West, rising 22% MoM. The South, which is the region where the largest number of new homes are under construction, improved by a much more modest +.6% MoM. In contrast sales dropped dramatically in the Northeast by -24% MoM, and fell -.9% in the Midwest.

The median price of a new home rose +.6% YoY to a national average of $239,500. In contrast, the mean price dropped for the first time in at least six months, falling by -3.4% YoY to $300,800.

The July rebound in new home sales is not anticipated to be repeated again soon due the increasing turmoil in the subprime and other mortgage markets.