The housing market, which had showed some promising signs during the spring, took a turn in the wrong direction in June as new home sales fell to an annual rate of 350,000, well under the consensus of 370,000.
It was an 8.4% decline from May which was adjusted up to 382,000 from 369,000. That was a two year high.
Inventories, which are a key component to the health of the market, rose slightly to 4.3 months form 4 months in May. However, that’s still a relatively low level of inventory.
New home sales are an important component of the housing market because they create jobs. Not only are construction workers needed to build the homes, but jobs are created through appliance sales, cable television and new floor installation, furniture and drapery purchases and landscaping, among other things.
No one expects to return to the 1.4 million annual rate at the peak of the housing boom in 2005. But new home construction needs to pick up for the economic recovery to gain any steam.
Was June just a bump in the road in a housing recovery or is housing still a fly in the recovery ointment?
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