*first I wanted to put up a chart from havers.com. Havers is sometimes wildly optimistic. This makes sense seeing that Havers relies on analysts and companies buying it's research. CNBC isn't likely to keep using it if it's always depressing. The second set of charts comes from Calculated Risk. His charts are ALOT more realistic and certainly he is an expert on housing.
U.S. New Home Sales Gain As Prices Fall, Again
· Home buyers know a good deal when they see it, and looks like that's what buoyed sales of new homes last month. June sales of new single-family homes increased 11.0% from May to 384,000 after two months of modest increase. Though the latest sales level was the highest since last November, sales remained down by nearly one-quarter from last June and by nearly three-quarters since the 2005 peak. June sales outpaced Consensus expectations for sales of 352,000 units. The new home sales figures are available in Haver's USECON database.
This graph shows existing home sales (left axis) and new home sales (right axis) through June.
As I've noted before, I believe this gap was caused by distressed sales - in many areas home builders cannot compete with REO sales, and this has pushed down new home sales while keeping existing home sales activity elevated.
Although distressed sales will stay elevated for some time, eventually I expect this ratio to decline back to the previous ratio. The small decline in June ratio was because of the increase in new home sales.
The ratio could decline because of increase in new home sales, or a decrease in existing home sales - or a combination of both.