The Week Ahead: The Ups and Downs of New Home Sales

New home sales have been up and down for the last couple of months—in April, they shot up to their highest rate in eight years, but in May they reversed course.

What will June hold for new home sales? The industry will find out on Tuesday, July 26, when HUD and the Census Bureau jointly release the new home sales report for June.

May’s seasonally adjusted annual rate for new home sales was at 551,000, down 6 percent from April’s rate of 586,000 (in May they were still up by 8.7 percent). The dropoff over-the-month in May was expected given April’s spike, according to Trulia Chief Economist Ralph McLaughlin.

“To put it into perspective,” McLaughlin said, “May’s figure of 551,000 is the second largest annual rate over the past year, eclipsed only by last month’s revised figure of 586,000.”

The forecast for new home sales in June, according to MarketWatch, is for an annual rate of 560,000, which would be an increase of about 9,000 from May. The effect of continued tight inventory, kept tight in the new home space by a lagging number of building permits, remains to be seen for June. Will they bounce back from May’s swoon, or will they take another tumble?

Housing Vacancies and Homeownership for Q2, Census Bureau, 10 a.m. EST

National vacancy rates were 7.0 percent for rental housing and 1.7 percent for homeowner housing in the first quarter 2016, according to a report from the Department of Commerce’s Census Bureau. The Q2 report will be released on Thursday, July 28.

The rental vacancy rate of 7.0 percent was 0.1 percentage point lower than the rate in the first quarter 2015 and was virtually unchanged from the rate in the fourth quarter 2015. The homeowner vacancy rate of 1.7 percent was 0.2 percentage points lower than the rate in the first quarter 2015 and 0.2 percentage points lower than the rate in the fourth quarter 2015.

The homeowner vacancy rate was lowest in the suburbs sitting at 1.5 percent and the rates were higher outside Metropolitan Statistical Areas (MSA) with 2.0 percent and inside principal cities with 1.9 percent, though these rates were not statistically different from each other. The homeowner vacancy rate outside MSAs was lower than the first quarter 2015 rate, while the rates inside principal cities and in the suburbs were not statistically different from the first quarter 2015 rates.

Additionally, the homeowner vacancy rate was lowest in the West at 1.2 percent. The rates in the Northeast, 1.9 percent; Midwest, 1.7 percent; and South, 2.0 percent, were not drastically different from each other. Likewise, the homeowner vacancy rate in the South was lower than the first quarter 2015 rate, while the rates in the Northeast, Midwest and West were not drastically different from the first quarter 2015 rates.

This week’s schedule

Tuesday, July 26

S&P Case/Shiller Home Price Index for May 2016, 9 a.m. EST

New Home Sales for June 2016, HUD/Census Bureau, 10 a.m. EST

Consumer Confidence for July 2016, Conference Board, 10 a.m. EST

Wednesday, July 27

Pending Home Sales Index for June 2016, National Association of Realtors, 10 a.m. EST

Housing Vacancies and Homeownership report for Q2, Census Bureau, 10 a.m. EST

Friday, July 29

GDP, “Advance” estimate for Q2, Bureau of Economic Analysis, 8:30 a.m. EST

Consumer Sentiment for July 2016, University of Michigan, 10 a.m. EST