New Home Sales Preview

Following Wednesday's strong existing home sales report, new home sales are due out at 10:00 a.m. ET. New home sales are forecast to show another strong gain for June, at a consensus gain of 0.9 percent to a 550,000 rate vs. May's 546,000, with estimates ranging from 535,000 to 570,000. Builders are confident as evidenced by the recent big uptick in permits. although lead times in construction are long and the ongoing supply constraints are likely to dampen sales gains while boosting prices. Following Wednesday's strong existing home sales report, Lawrence Yun, NAR chief economist, said, "Buyers have come back in force, leading to the strongest past two months in sales since early 2007. This wave of demand is being fueled by a year-plus of steady job growth and an improving economy that's giving more households the financial wherewithal and incentive to buy." "Limited inventory amidst strong demand continues to push home prices higher, leading to declining affordability for prospective buyers," Yun added. The median existing home price of $236,500 was above the above the peak sales price of $230,400 last seen in July of 2006, which should bode well for new home sales prices.