INSTANT VIEW: New home sales jump 11 percent in June

NEW YORK (Reuters) - Sales of new single-family homes in the United States rose more than expected in June.

KEY POINTS: * Sales rose to an annual rate of 384,000 in June, the Commerce Department reported, up 11 percent from May. * Housing inventory fell to 8.8 months of supply, compared with 9.6 months a year ago. * The rise in sales and the declining inventory is another indication the housing sector, which led the United States into the current recession, may have hit bottom and is starting to rebound. * Despite the encouraging data, the median sale price for a new home fell to $206,200, down 5.8 percent of the previous month, and down 12 percent from a year ago.

COMMENTS:

PIERRE ELLIS, SENIOR ECONOMIST, DECISION ECONOMICS, NEW YORK

"The housing market is improving quite notably. Ultimately, that will be reflected in a stabilization of prices which will take place at different rates in different regions and will not be as rapid as some hope. But the improved demand is very encouraging. June produced a solid sales gain which proves that builders were not crazy to increase production of single-family homes in June.

"Sales are strong and inventories are falling quite decently even with the production increase. For the moment it looks like a very good market, other than in the South, where weak demand still lingers."

DOUG ROBERTS, CHIEF INVESTMENT STRATEGIST, CHANNEL CAPITAL RESEARCH, SHREWSBURY, NEW JERSEY:

"Let's say new homes are no different than the retailers. They're trying to liquidate their inventory a the best possible time.

"That doesn't spell a rebound in the housing market. You also have existing homes, which are a totally different bailiwick and there may be some latent supply there ... just simply people who weren't willing to cut price. That's a hidden supply that could be overhanging.

"It could be a stabilization, but my whole thesis with this recovery is that a bottom doesn't necessarily need to lead to a bounce.

"Unemployment is a guiding factor. Despite the massive number of programs that are out there, that's more triage to protect existing homeowners. But are you really going to go out and buy a home if you think you might not be employed."

ERIC KUBY, CHIEF INVESTMENT OFFICER, NORTH STAR INVESTMENT MANAGEMENT CORP, CHICAGO:

"The numbers are very positive, and the inventory of unsold homes has also dropped this month. It was this and the unemployment that people have been really waiting for, and since the numbers are positive, it is definitely positive for the market. I expect to see nice earnings to continue, and the market will reflect on this. We would need a really bad news to derail this market."

MICHELLE MEYER, ECONOMIST, BARCLAYS CAPITAL, NEW YORK:

"New home sales jumped to the highest level since last November and marking the biggest month-to-month gain since December 2000. Sales jumped by 43 percent in the Midwest, by 29 percent in the Northeast and by 23 percent in the West. This more than offset a 5 percent drop in the South, which due to bubble markets in Florida and Georgia, still have a massive overhang of homes for sales and competition from foreclosed properties."

KIM RUPERT, MANAGING DIRECTOR OF GLOBAL FIXED INCOME ANALYSIS, ACTION ECONOMICS LLC, SAN FRANCISCO:

"It gives credence to the belief that the worst of the housing collapse is over. Maybe the various stimulus measures have had an impact and that one important sector in the economy is recovering and we could see positive growth before year-end in the entire economy."

DAVID DIETZE, CHIEF INVESTMENT STRATEGIST, POINT VIEW FINANCIAL SERVICES, SUMMIT, NEW JERSEY:

"There's a couple of factors. One, improving sentiment. There's nothing like some return to normalcy in the credit markets plus a raging bull market since March to boost sentiment among the home-buying population. The other thing of course is that there's been pent-up demand. New family formation and depreciation of the existing housing stock does not abate during periods of economic crisis. So you've also got a situation where there's been a lot of would-be buyers on the sidelines and that group has been growing, waiting for some sort of sign that the economy is not going to fall through the floor.

"We're seeing some of those buyers get up off the bench and take advantage of the opportunities. The other thing is that affordability is now at levels not seen for a generation, when you factor in lower prices being sought by home-builders with far more reasonable mortgage rates relative to incomes. Affordability is also making it possible for people to step up and get active.

"It's excellent news, but remember, it's just one month, it's not all of real estate, it doesn't include residential preexisting home stock, you're coming off very weak numbers so yes it's a nice edge up but from hopefully trough levels. It's still not at an annualized rate that signals that the unpleasantness is over with, but certainly it's a clear step in the right direction. Obviously we're also looking at the level

of housing starts as an indicator for what sales might look like in the months to come, so you don't want to say that we're definitively out of recession by virtue of this one data point."

SCOTT BROWN, CHIEF ECONOMIST, RAYMOND JAMES & ASSOCIATES, ST PETERSBURG, FLORIDA:

"I take the numbers with a grain of salt but at face value they are encouraging.

"Certainly it's a big surprise. These (home sales) numbers tend to be pretty choppy and subject to large revisions, but taken at face value it will be encouraging to the stock market and a big negative for government bonds.

"Home sales may tend to bunch up in response to mortgage rates. We need to see what happens next month.

"Prices are still coming down in a lot of areas."

T.J. MARTA, FOUNDER AND MARKET STRATEGIST, MARTA ON THE MARKETS, SCOTCH PLAINS, NEW JERSEY:

"The new homes market is clearing. These are huge percentage increases. Housing has become more affordable, not only because of the fall in prices, but mortgage rates have been pinned down by the Fed. It's certainly a positive development. When you compare the 11 percent jump in June new home sales to the 3.6 percent jump in June sales of existing homes reported on Thursday, the particular spike in new home sales might have to do with corporate pressures to unload inventory."

STEPHEN MASSOCCA, MANAGING DIRECTOR, WEDBUSH MORGAN IN SAN FRANCISCO

"It was better-than-expected. It's probably more of what this market needs to keep rolling along -- it's more good news. This is more sauce for the goose here. This is going to keep things going. There's a lot of liquidity out there. They've flooded the world with dollars, they've flooded the world with currency - it has to go somewhere."

JACOB OUBINA, CURRENCY STRATEGIST, FOREX.COM, BEDMINSTER, NEW JERSEY:

"Stocks had a delayed reaction but have now blasted into positive terrain, and we're seeing commensurate gains in the yen crosses and in euro/dollar. It's more good news and follows the good German confidence report. So while the data continues to come in better-than-expected, you're going to see this risk rally continue. It's going to take some pretty ugly earnings reports or a downturn in economic data to turn this around. I'd expect the euro/dollar high around 1.4337 to be the next resistance level if this euphoric rally continues."

GARY SHILLING, PRESIDENT, A. GARY SHILLING & CO., SPRINGFIELD, NEW JERSEY:

"I think the housing sector is still weak. Basic problem is there is a huge excess inventory and that continually depresses prices. Obviously prices are down. Case Shiller quarterly index will probably be down 10-15 percent from here before it's over. But there is still a lot of pressure because of excess houses. New home sales are going to be very limited whether they in a bottoming process or not remains to be seen. When you have got that excess inventory then there is no great zeal to build more houses."

JIM AWAD, MANAGING DIRECTOR AT ZEPHYR MANAGEMENT IN NEW YORK

"The data will reinforce the developing thinking that housing market has bottomed and that economy has stabilized and will grow in the third quarter. In the cocktail of the market, it will be viewed positively and will add credence to the bulls, who think we will have a rebound in the markets going forward."

MARKET REACTION: STOCKS: U.S. stock indexes rallied. BONDS: U.S. Treasury debt prices added to losses. DOLLAR: U.S. dollar rose against the yen, fell against the euro.