Instant View: New home sales at record low in July

NEW YORK (Reuters) - New U.S. single-family home sales unexpectedly fell in July to set their slowest pace on record while prices were the lowest in more than 6-1/2 years.

KEY POINTS: * The Commerce Department said sales dropped 12.4 percent to a 276,000 unit annual rate, the lowest since the series started in 1963, from a downwardly revised 315,000 units in June. * Analysts polled by Reuters had forecast new home sales unchanged at a 330,000 unit pace last month.

COMMENTS:

WAYNE SCHMIDT, CHIEF INVESTMENT OFFICER, GRADIENT INVESTMENTS, ST. PAUL, MINNESOTA:

"It was down quite a bit from June, which probably isn't a total surprise. It just shows the weakness in the housing market. We were a little bit propped up with the government incentives and now that they are behind us, we are left with the realities of the home market.

"It raises the concerns for that double-dip recession. Housing is certainly an important part of the economy and it's been down and out for a while. That ups the ante for a double-dip."

RONALD SIMPSON, MANAGING DIRECTOR, GLOBAL CURRENCY ANALYSIS, TAMPA, FLORIDA:

"I don't think anybody was expecting a good new home sales report based on the existing home sales data yesterday. Dollar/yen moved down near 84 but it's back up at almost 84.50 now. I think the knee-jerk move was based on the equity market reaction. Overall, the U.S. economy is not looking too good. It seems to me that more recently, we've seen the dollar move lower against the yen and the euro on the back of weak economic data. I'm just wondering how long the dollar is going to maintain its safe-haven status."

STEVEN RICCHIUTO, CHIEF ECONOMIST, MIZUHO SECURITIES, NEW YORK:

"There is nothing good you can say about the number. There was downward revisions to the previous month, a much weaker headline number, broad-based weakness, average immediate home prices still moving down and showing the market is still not clearing at these lower prices, and month supply of homes moved up a lot simply because the selling rate dropped so much -- it is a bad report through and through, there is nothing in the details to tell you that things are improving whatsoever.

"The odds of the dreaded double-dip are increasing. I've been one of the only people in the double-dip camp explicitly, but more and more of the people who have been playing in the game of what is the probability -- 20 percent, 30 percent -- are going to start saying maybe it is 50 percent.

"You are getting a confluence of negative numbers."

MICHAEL WOOLFOLK, SENIOR CURRENCY STRATEGIST, BNY MELLON, NEW YORK:

"After yesterday's existing home sales data, another disappointing July housing number was not that unexpected. Still we had quite a shock yesterday. The volatility in the housing data has been in part due to the government incentives provided for first-time home buyers. The assumption to be made about the health of the housing market is that it's weaker than we thought and could get weaker. I wouldn't say this is proof of a double-dip, but clearly the economy is slowing markedly, and it's a broad-based slowdown. I think it'll be difficult for the dollar to rally against the yen in this environment, though it's worth noting that yen gains on the crosses -- against the euro, sterling and elsewhere -- have been even more remarkable. It's been a more disorderly move."

TOM PORCELLI, SENIOR ECONOMIST, RBC CAPITAL MARKETS, NEW YORK:

"There has been nothing good that has come out of housing over the last several months. We don't expect that to change anytime soon. What we are seeing is the downside of government intervention. It had fanned expectations of a market bottom when in fact, it created a false bottom. We expect home sales to stay at this remarkably low range with remarkably high unemployment. There is also little demand for lending.

"What does this mean for home prices? Home prices are back into negative territory on a year-over-year basis. We see home prices could fall another 15 percent from here.

"I don't think housing alone could push us into another recession because it's not big enough at this point. But the risk of a double-dip recession is meaningfully high."

MARKET REACTION: STOCKS: U.S. stock indexes fell, but recovered losses. BONDS: U.S. Treasury debt prices added to gains. DOLLAR: U.S. dollar erased gains against the yen.