Housing bumps along the bottom
New home sales data shows that it’s going to be a long slog pulling the U.S. housing market out of the doldrums. Not only was the sales rate at 342K below consensus but the backlog of unsold inventories continues to be a drag. And a weak jobs market certainly isn’t going to help move those homes any faster even with home prices falling.
Home inventories stood at 10.2 months. True this is down from the 10.4 months in April, but as MFR Inc. economist Josh Shapiro notes, it’s still a long way from a normal 6 months.
Looking ahead, reports from homebuilders indicate that activity dropped off a bit in June after improving in the two preceding months. This is consistent with an elongated bottom for housing rather than anything resembling a “v-shaped” recovery. The same appears to be true of existing homes, where first-timers are being tempted by deeply discounted properties coming out of foreclosure, but activity up the food chain remains spotty at best.