Bill McBride at Calculated Risk has the definitive take on today’s new home sales data.
His key point: What matters is housing inventory. It’s collapsing, and that’s going to be the key driver for prices.
Although there are always questions about the NAR data, the report this morning was another positive housing report. The NAR reported inventory decreased to 2.39 million units in June, down 3.2% from the downwardly revised 2.47 million in May (revised down from 2.49 million). This is down 24.4% from June 2011, and down 10.8% from the inventory level in June 2005 (mid-2005 was when inventory started increasing sharply). This is the lowest level for a June since 2002. Clearly inventory will be below the comparable month in 2005 for the rest of the year and will probably track close to the level in 2004. It is also possible that inventory has peaked for 2012 (or is at least very close to the peak).
Here’s his key chart. Pay attention to the bright red June line, and note how far down it is from the dark blue of 2005.
Photo: Calculated Risk