Markets jumped in the minutes after the New Home Sales report posted its biggest one-month leap in eight year, as of noon in Monday’s session all three markets have dipped back into the red. However, markets shot up more 11% over the past two weeks, so the minor decline isn’t too worrying yet.
As of 12:00pm, the NASDAQ is down 0.44% to 1957, the Dow has fallen 0.22% to 9073, and the S&P 500 is trading 0.23% lower at 977.
The only macroeconomic data released today was the new homes data, which led many economists to announce that stabilization, and even recovery, had begun in the real estate market.
Sales of new single-family homes soared by 11% in June ― the biggest one-month jump in eight years ― bringing the annual pace of sales to 384,000, well above the market consensus of just 350,000.
“The evidence continues to grow that single-family housing activity has bottomed out,” commented analysts from RDQ. “Single-family new home sales have risen for three straight months, single-family housing starts have risen for four straight months, and the NAHB’s housing market index bottomed in January.”
Sales climbed in three regions, particularly in the Midwest, but they remain down in the South.
Inventory overhang dropped for the third straight month, falling to an 8.8-months’ supply ― the lowest level since October 2007. In May, overhang was 10.2 months, and the peak was a 12.4-months’ supply in January.
The raw number of new homes for sale is 281k, the lowest level since 1993, and down from 436k in June 2008.
“This report along with recent data on housing starts and existing home sales tells us the housing sector is finally in recovery mode,” said Deutsche Bank’s chief US economist Joseph LaVorgna. “This will go a long way to eventually helping to stabilize the economy in the second half of this year and to provide us with much better overall economic growth prospects next year.”
Housing data will continue to dominate the morning’s headlines tomorrow when the S&P Case-Shiller index of home prices is released at 9:00.