Sales of new homes in the United States were down 2.1 percent in May, but inventories hit a record low due to reduced production, the U.S. Commerce Department said.
JANE CARON, CHIEF ECONOMIC STRATEGIST, DWIGHT ASSET MANAGEMENT,
It's sort of status quo. U.S. home sales have been trending sideways at an extremely low rate for a very long time and until the existing overhang in home sales is cleared there's not going to be much of a change in that rate.
VIMOMBI NSHOM, ECONOMIST, IFR ECONOMICS, A UNIT OF THOMSON REUTERS:
New home sales slipped 2.1% in May, to an annualized sales rate of 319,000 homes sold. The decline comes after three months of upward revisions (roughly 5k), with the most recent revision adjusting April up to 326k sales (from 323k). Previously released existing home sales data had already indicated a decline in purchasing activity for the month. Obviously higher-priced homes (new construction carries a price premium) would have felt the same pattern. Purchases are 13.5% higher than sales in May of 2010, much better than the annual decline of 22% when comparing April's year over year figures (given the net effect of the tax credit).
Sales were entirely supported by the Southern region -- the largest housing segment -- where activity increased by 2.4%. Midwestern sales were flat over the month and Northeastern sales plummeted by 26.7%. Inventories continue to sink to record lows -- in May 166k homes were available for sale. In fact, nearly every stage of housing availability is valued at record lows (completed 64k and under construction 77k). As reflected in home builder sentiment, construction workers are losing confidence and holding off on new construction, waiting for the current backlog (6.2 months worth of homes) to correct. Month's supply has fallen nearly 14% in the first five months of the year.
ALEX HODER, ECONOMIC ANALYST, FTN FINANCIAL, NEW YORK
It looks like they beat expectations. Existing home sales also came in slightly above expectations. But the bottom line is, they're in a really low, really tight range and these month to month changes don't matter much.
MARKET REACTION: STOCKS: U.S. stock indexes were little changed BONDS: U.S. bond prices held steady FOREX: The dollar was little changed