On The House

New home sales jumped big time last month, and more importantly the supply of new homes on the market dropped to 8.8 months, a damn good sign. The bad news is that the coming foreclosure wave is going to swamp that, and that home prices are still falling pretty sharply.

Economists forecast new home sales would rise to a 352,000, according to the median of 62 projections in a Bloomberg News survey. Estimates ranged from 335,000 to 377,000. Commerce revised May’s reading up to a 346,000 rate from a previously reported 342,000.

The median price of a new home decreased 12 percent to $206,200 from $234,300 in June 2008. Last month’s value compares with $219,000 in May.

Sales of new homes were down 21 percent from June 2008. They reached a record-low 329,000 in January, down 76 from the July 2005 peak.

The jump in sales in June was led by a 43 percent surge in the Midwest. Purchases increased 29 percent in the Northeast and 23 percent in the West. They dropped 5.3 percent in the South, to the lowest level since January 1991.

Sales may be picking up and supply is finally decreasing, but prices are still falling, and until prices stabilize, we're still in trouble.

CalcRisk has more:

Months-of-supply for inventory has peaked, and there is some chance that sales of new homes has bottomed for this cycle - but we won't know for many months. However any recovery in sales will likely be modest because of the huge overhang of existing homes for sale.

Not to mention the foreclosures rising, dropping prices and increasing the supply of existing homes on the market.