US new home sales rise in July; downward revision of June data indicates weaker performance in Q2

US new home sales grew robustly in July, while June’s data was revised down. In July, new home sales rose a solid 12.4 percent month-on-month to 654,000, higher than consensus expectations of 580,000. June’s sales were downwardly revised by 12,000 on net.

This implies that the performance for the second quarter might be slightly weaker, noted Barclays in a research report. On a year-on-year basis, new home sales were up 31.3 percent year-on-year. A sharp increase in sales in the South and a rebound in the Northeast mainly drove the rise in overall sales in July.

In the West and Midwest, sales remained broadly flat. Months’ supply declined to 4.3 from 4.9 following the rise in sales. This is the lowest reading since 2013 and implies that the buildup of the tightening in housing supply. The performance of prices was quite mixed in August. Median prices declined 5.1 percent in sequential terms to USD 295,000. Average prices grew moderately by 0.7 percent month-on-month t o USD 356,000.

Median prices growing more rapidly than average prices probably show a degree of over performance in the housing market’s high end. The median number of months for sale was 3.5 months, seasonally adjusted.

The new path of new home sales through July kept the Q3 GDP tracking unchanged at 2.1 percent quarter-on-quarter saar after rounding, said Barclays in a research report. Subdued home prices countered the firmer than expected new home sales. This implies similar brokers’ commissions as compared with the projections, noted Barclays.