U.S. new home sales fall sequentially in June, residential construction likely to rebound in months ahead

U.S. new home sales falls more than anticipated in June. On a sequential basis, new home sales dropped 5.3 percent to 613k in the month. The outturn was considerably lower than consensus expectations of 668k. The data for May were also downwardly revised to 666k from 689k, and net revisions in this report came up to -27k.

The fall in June was widespread, with sales falling in the West, South, and Midwest. Sales were up in Northeast. Below expected sales led to an increase months’ supply to 5.7 in June and imply increased inventory of new homes in line with levels seen at the beginning of this year, when months’ supply remained at 5.6.

Data on prices for new homes also disappointed. The average price dropped 0.5 percent sequentially and fell 2 percent year-on-year. The number of new homes sold with construction yet to start rose further, despite the declines in sales of houses under construction and completed homes. According to Barclays, this continues to imply a rebound in residential construction in the months ahead.

Today’s report was softer than anticipated, in terms of volume as well as sales and home price appreciation. Sales dropped more than expected in June, and data for May were downwardly revised. Moreover, average home prices fell for the second straight month. Altogether, the data suggest lower brokers’ commissions and residential investment in the second quarter. But the overall GDP tracking estimate was unchanged at 5.2 percent, added Barclays.

At 18:00 GMT the FxWirePro's Hourly Strength Index of US Dollar was highly bearish at -176.363. For more details on FxWirePro's Currency Strength Index, visit http://www.fxwirepro.com/currencyindex