- Summary: (1) The Census Bureau reported that sales of new homes fell 3% in June to 1.13 million units, and sharply revised down its estimate for May from 1.23 million units to 1.17 million units. Sales were down 11.3% in the Northeast, 7.9% in the Midwest and 6% in the South, but were up 8.2% in the West. Inventories of unsold homes at end-June hit a record 566,000 units, a 6.1 month supply at current sales rates, down from 6.4 in February. (2) The Commerce Department reported that new orders for durable goods exclusing defense and aircraft grew only 0.4% in June, sharply lower than May's 1.3% growth. Orders for defense capital goods were up 51.2% and aircraft orders rose 8.8%, so total durable orders rose 3.1%. (3) The Labor Department reported that claims for unemployment benefits fell by 7,000 to 298,000 in the week ending July 22.
- Comment on related stocks/ETFs: The Census Bureau's new homes sales data, showing a decline of 3% in June, is far worse than the June existing homes sale decline of 1.3% reported yesterday by the National Association of Realtors [NAR], though the NAR's statistic for unsold home inventory is worse than the Census Bureau's at 6.8 months versus 6.1 months. The WSJ article quotes two views on the housing market decline: a Global Insight economist says the slowdown has decelerated in recent months and is more gradual than anticipated, while JP Morgan's US economist says "In the last two or three months, things have come down rapidly." The lousy Census Bureau data for June unsold home inventories suggests continuing weakness for the homebuilders; see Philip Frank on the short case for Centex (CTX). The homebuilder ETF (XHB) has been a wonderful short play since early April; David Fry comments on the chart.
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