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New Home Sales Rise 5.4% In July. What?

Headlines from the Trades and Financial Press trumpet July's New Home Sales numbers. From “New home sales jump 5.4% in July to 507K” to “New Home Sales increased to 507,000 Annual Rate in July” to “New Home Sales Bounce Back in July from a Disappointing June”

Now for a few truths. Seasonally-adjusted data is worthless. Non seasonally-adjusted data shows the opposite. New Home sales decreased in July to 43,000 from June's 45,000 sales.

Also New Home sales for the previous months were revised downward. April revised down from 51,000 to 48,000 and May revised down from 51,000 to 49,000.

Here's an article from Forbes:

Sales of newly-constructed single-family homes rose 5.4% in July compared to June and were 25.8% higher than the pace one year ago, the Commerce Department reported Tuesday.

July sales of new single-family homes reached an annual, seasonally-adjusted rate of 507,000, according to Commerce. That level is above the revised rate of 481,000 (annual, seasonally-adjusted) in June, and well above the July 2014 estimate of 403,000. Tuesday’s numbers fell within the range of forecasts of economists surveyed by Bloomberg ahead of the report.

The volatile new home sales data tallies the number of newly constructed homes with a committed sale each month. Economists view it as a measure of economic momentum and an indicator of future consumer purchases of furniture and appliances. But the small sample size and a margin of error around 15% means the numbers often swing wildly.

The median price of a new home sold in June was $285,900; the average sales price was $361,600. At the end of July inventory stood at 218,000, a 5.2-month supply at the current sales pace. Lack of inventory continues to be a problem in the housing market, in terms of both new homes and previously-owned ones. Economists traditionally say a six-month supply is needed to balance supply and demand.

Tuesday’s release of new home sales includes a revision of prior months’ numbers, which shows the sales pace has been generally picking up since last summer, with dips in November 2014, March 2015, and June.

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