The data on new home sales for the month of May is going to be a disappointment even for the green shoots crowd, at least on the surface. Sales of new homes in May fell by 0.6% to 342,000 on an annualized rate. Dow Jones had estimates calling for a 2% gain to 360,000. The numbers in April were revised to 344,000 from a prior target of 352,000.
The SPDR S&P Homebuilders (NYSE: XHB) is now up 2.4% at $11.54. It looks like if this is bad news for the homebuilders and appears to be at least close enough or in-line with what the green shoots crowd was willing to accept.
To demonstrate how weak these numbers are, this is a drop of more than 30% in new home sales from May 2008.
The median price for a new home in May fell by more 3% to $221,600 on a year over year basis. But if you are looking for some green shoots, this is actually above the reading in April 2009 of $212,600.
To show how slow this really is, this annualized figure translates to roughly 32,000 new homes being sold nationwide. That is not very exciting and not promising of any massive return to growth ahead of the summer buying season.
The real tell for how housing is going to shape up for the rest of 2009 will be the data coming out over the next three months during the strong summer buying season.
Jon C. Ogg
June 24, 2009
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