NeW

Instant view: New home sales down, Richmond Fed lower

Reuters News
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Posted: Aug 24, 2011 10:45 AM

NEW YORK (Reuters) - New U.S. single-family home sales fell more than expected in July to hit a five month low.

RICHMOND FED:

Manufacturing activity in the Richmond, Virginia region fell in August.

KEY POINTS: * The Commerce Department said on Tuesday sales slipped 0.7 percent to a seasonally adjusted 298,000-unit annual rate, the lowest since February. June's sales pace was revised down to 300,000 units from the previously reported 312,000 units. * Economists polled by Reuters had forecast sales at a 310,000-unit rate. In the 12 months through July, new home sales rose 6.8 percent.

COMMENTS:

TOM PORCELLI, U.S. ECONOMIST, RBC CAPITAL MARKETS, NEW YORK

RICHMOND FED: "We have the third big regional manufacturing report to round out the ISM story and it's not a good picture right now. You have good odds of having the ISM under 50. The reason why I think that is important is it's another knock to the already fragile market and consumer psyche."

MILLAN MULRAINE, SENIOR U.S. MACRO STRATEGIST, TD SECURITIES, NEW YORK:

ON RICHMOND FED:

"I think what we've been seeing developing over the past few weeks is increasing disappointment on the data front. The Richmond Fed wasn't particularly surprising. It was consistent with what we've seen in the other regional manufacturing numbers. In some ways it goes to show that manufacturing activity, which has been one of the few engines of growth over the past few years has stalled. At least for now, we do think that we're likely to see at best some stagnancy.

"I think its consistent with the theme we've seen in the other regional manufacturing activities. Manufacturing sectors have more or less run out of steam.

"I think while the market is disappointed, the damage was done from the Philly Fed."

PAUL DALES, U.S. ECONOMIST, CAPITAL ECONOMICS, TORONTO

"It's more evidence that recent weakness in the economy and the drop in consumer confidence is taking a toll on the housing market. I think there will very little chance that the housing market will recover in the second half of the year or even the next few years. The housing market is struggling with banks asking for increased down payments and there are significant structural issues holding back demand."

VMOMBI NSHOM, ECONOMIST, IFR ECONOMICS, A UNIT OF THOMSON REUTERS:

"Sales of new homes fell for a third month in July, to a depressing 298,000, which as low as the figure seems, is still 6.8% higher than that which was sold in July last year. Not only is the decline of 0.7% larger than expected, but June revisions -- down to 300k -- make forecast consensus of a dip to 310k from 312k look misplaced.

"May sales also received revisions to 309k (from 315k). The third month of declining homebuyers and consequently competitive activity and bids correlated to falling prices, which fell 6.3% last month to a median price of $222,000, and record low levels of inventories with just 165k new home available for sales at the end of July. Even with lower purchases, the month supply of homes did not change between June and July, which is still 6.6 months. New properties' value of $222k compares with previously-owned homes' median value of $174k."