NEW YORK (Reuters) - Sales of newly built U.S. single-family homes rose for a fourth straight month in July to set their fastest pace since last September, while the inventory of unsold homes fell to the lowest level in 16 years, a government report showed on Wednesday.
* The Commerce Department said sales rose 9.6 percent to a 433,000 annual pace, the highest in ten months, from an upwardly revised 395,000 in June. That was the biggest monthly percentage gain since a matching increase in February 2005.
* Analysts polled by Reuters had forecast a 390,000 rate. The median home sales price in July fell 11.5 percent to $210,100 from a year earlier, the department said. Compared to June, the median price slipped 0.1 percent.
* The inventory of homes available for sale in July fell 3.2 percent to 271,000 units, the lowest since March 1993, the department said. July’s sales pace left the supply of homes available for sale at 7.5 months’ worth, the lowest since April 2007.
“They are pretty impressive. It was an upside surprise, but I think after the strong existing-homes sales data we had on Friday it shouldn’t be that much of a surprise. We have seen positive signals in pending homes sales, housing starts and permits and generally the housing sector does seem to be finding a base and rising at a reasonable percentage rate from what were extremely low levels.
“The one caveat to this is that there is a tax credit for certain first-time buyers of $8000 which expires on the 30th of November, so that is probably providing some temporary support. While there are caveats as to how much longer this will extend, it is certainly encouraging given that they are new home sales. Existing home sales are being supported by sales of foreclosed properties, while new home sales by definition are not foreclosed property, and this suggests that the housing revival isn’t solely due to people rushing to buy cheap foreclosed property.”
DAVID WATT, SENIOR CURRENCY STRATEGIST, RBC CAPITAL MARKETS, TORONTO:
“The new home sales data was good, there’s no doubt about it. With low interest rates, prices are now at a place where the market is starting to clear. That’s a good sign for markets and risk sentiment.
“The question is, are signs that the U.S. economy is starting to bottom good for the U.S. dollar or for other currencies? A lot of people are taking profits on the other currencies, suggesting this might turn into a positive dollar environment. Equities and commodities have done very well over the past few months, but now we’re entering a period that’s historically dicey for equities. This could create a positive dollar environment, but I still think you need to see more strong U.S. data.”
WARREN SIMPSON, MANAGING DIRECTOR, STEPHENS CAPITAL MANAGEMENT,
“Obviously things are getting better and the big question now becomes, is it a ‘V’ recovery or a ‘W’ recovery? I was impressed with the durable goods order - biggest gain in two years - that impresses me. I still think we have too much inventory in housing right now, we still have a ways to go in housing. And we have a ways to go with employment and until those get better, we still have a ways to go. I think the market will show that in the next couple of months and stay in some sort of trading range up in here.”
PETER KENNY, MANAGING DIRECTOR, KNIGHT EQUITY MARKETS, JERSEY CITY, NEW JERSEY:
“These are great numbers, better than expected, and they should definitely add fuel to the move higher in the market. They’re of a group of numbers that have come out better than expected: durable goods, housing starts, housing sales. It’s all very positive, not just because of the macro implications, but because they will drive consumer confidence numbers.
“I’m going to go out on a limb and say you’re starting to see the beginning to see what could be the start of a significant shift toward greater sales and starts. A significant improvement in retail and consumer confidence.”
MARKET REACTION: STOCKS: U.S. stock indexes rebounded from losses. BONDS: U.S. Treasury debt prices were little changed. DOLLAR: U.S. dollar rose against the yen.