U.S. new home sales fall sequentially in July

New home sales in the U.S. dropped in July, coming in below the consensus expectations. Sales dropped 1.7 percent to 627k. This is below the consensus expectations of 645k. Meanwhile, the data for June was upwardly revised to 638k from 631k but net revisions in this report came up to -18k because of downside revisions to May and April.

The fall in July was mainly due to the Northeast where sales fell from 44k to 21k, and sales fell in the South too. The West and Midwest regions recorded higher sales. Below expected sales led to a rise in months’ supply to 5.9 in July from June’s 5.7 and imply a further rise in inventory of new homes in line with levels seen last summer when months’ supply came in at 6.

Data on prices for new homes rebounded. The average price rose 5.9 percent year-on-year and the median price rose 1.8 percent. The July report for new home sales is in line with a weakening in a number of housing market indicators this summer, ranging from prices, to sales and starts, which appears to have led the FOMC to highlight housing as downside risks to the outlook.

“With regard to the effect on our Q3 tracking estimate, the weak sales numbers were offset by the improvement in home prices and imply slightly higher residential investment relative to what we had penciled in. However, after rounding our Q3 GDP tracker was left unchanged at 3.0 percent”, noted Barclays.

At 16:00 GMT the FxWirePro's Hourly Strength Index of US Dollar was slightly bullish at 70.9421. For more details on FxWirePro's Currency Strength Index, visit http://www.fxwirepro.com/currencyindex