New Home Sales: July 2011

Today, the U.S. Census Department released its monthly New Residential Home Sales Report for July showing a monthly decline with sales falling 0.7% since June but increasing 6.8% from July 2010 and remaining at an epically low level of 298K SAAR units.



It's important to recognize that the inventory of new homes has now fallen to a new series low at 165K units, lowest level seen in in at least 47 years while the median number of months for sale declined to 9.4.



The monthly supply remained flat at 6.6 months while the median selling price increased 7.15% and the average selling price increased 4.67% from the year ago level.



The following chart show the extent of sales decline to date (click for full-larger version).

The Chicago Fed National Activity Index: July 2011

Today’s release of the Chicago Federal Reserve National Activity Index (CFNAI) indicated notably weak but improving national economic trends for July with the index remaining in contraction territory for the fourth consecutive month at -0.06 while the three month moving average moved up slightly to -0.29.



The CFNAI is a weighted average of 85 indicators of national economic activity collected into four overall categories of “production and income”, “employment, unemployment and income”, “personal consumption and housing” and “sales, orders and inventories”.



The Chicago Fed regards a value of zero for the total index as indicating that the national economy is expanding at its historical trend rate while a negative value indicates below average growth.



A value at or below -0.70 for the three month moving average of the national activity index (CFNAI-MA3) indicates that the national economy has either just entered or continues in recession.

Radar Watching: June 2011

As I have noted in the past, since the home price index data provided by Radar Logic is more timely, unadjusted and un-smoothed it is particularly useful for gaining deeper visibility over our housing markets.



As for the latest trends, it’s important to note that the 25-MSA Composite is continuing to show significant year-over-year declines and after having broken well below the low set in March of 2009 (double-dipping) earlier this year, continues to come off the low as the typical spring and early summer transactions continue to mount.



The latest data shows that as of mid-June, prices have declined 4.56% below the level seen in June 2010 while turning up quite a bit since the lows seen this February.



It will be interesting to see how far the spring buying can push prices but it's important to note that this seasonal lift likely began to wane in early July (as will be reported in September) when transactions begin to trail off into the deep summer months.