US New Home Sales: Solid rebound in May - Wells Fargo

According to analysts from Wells Fargo, today’s US New Home Sales report was fairly strong and fairly clean. 

Key Quotes: 

“New home sales rose a solid 2.9 percent in May, reversing part of the prior month’s 7.9 percent drop. Revisions to the three previous months’ data were also encouraging. Sales were revised up by a total of 34,000 homes and April’s initially reported 11.4 percent drop was revised to a 7.9 percent drop. As we noted last month, new home sales are stronger than the data indicate. Sales in March were revised higher by 2,000 units to 644,000 homes, marking the strongest month since October 2007.”

“We do not expect new home sales to revisit the highs hit during the housing boom anytime soon. Today’s housing market remains a shadow of its former self and builders and developers have shrunk their businesses to meet this new marketplace.”

“Sales are clearly trending higher, particularly in the South, which accounts for roughly 60 percent of the nation’s home sales each year.”

“While the overall inventory of new homes available for sale rose to a 5.3-month supply in May, new home sales continue to be held back by a lack of inventory. Most of May’s rise in new home sales was for homes where construction has not yet started, which rose by 30,000 units. By contrast, sales of completed homes rose by just 4,000 units. Inventories of completed homes rose slightly in May but remain near their all-time lows at just 62,000 homes, suggesting that new home construction will continue to strengthen during the second half of the year.”