The Census Bureau reported a rebound for new home sales in May. New residential home sales posted at a seasonally adjusted annual rate of 610,000. This was 2.9 percent higher than the revised April numbers and 8.9 percent higher than a year ago. The median price of a new home contracted in May was $345,800 while the average new home price in May came in at $406,400. Just like we saw with existing home sales this week, median home prices hit a new all-time high. New home sales volume, while up from last month, is still off the March highs and lower than even February numbers.
Looking at mortgage interest rates, the upward revisions to new home sales in the past few months would make more sense. Lower interest rates have provided some lift to sales during the first half of the year. I have no doubt that sales would have been lower had rates not pulled back this year.
So far in 2017, the trend for mortgage interest rates has been a steady decline…
The big question going through the rest of the summer selling season is whether new home sales can maintain levels above 600,000 units. That may prove to be difficult with median prices hitting all-time highs. New home builders in Houston Texas will certainly have their work cut out for them with oil prices languishing near $43 per barrel.
So far the Federal Reserve seems Hell-bent on raising interest rates in the face of a soft economy and weak employment wage growth. That probably stems from the fact that the people running the Federal Reserve are primarily servants of the banks, and not the real economy as they claim. The Fed’s credibility trap just grows larger and larger, as evidenced by the rate hike this month and subsequent jawboning from FOMC participants. Bond markets certainly aren’t buying the “strong economy” story. It’s no wonder so many people are Fed up with their myopic pursuit of self-preservation in service to a corrupt banking system. I suspect new home sales numbers will be a persistent reminder of the Fed’s credibility gap for years to come.