NEW YORK (Reuters) - New single-family home sales in June fell by the most in more than a year and prices resumed their downward trend, suggesting a setback for the budding housing market recovery.
MICHELLE MEYER, SENIOR ECONOMIST, BANK OF AMERICA MERRILL LYNCH, NEW YORK
“On balance, it was disappointing report given the rebound in home builder sentiment. We have to be a little cautious. Demand is fairly soft but it has recovered from the lows. Builders have to be careful. The pace of construction pickup should be dictated by housing demand.”
“Housing is not going to influence the Fed in either direction. The gains have not been sustainable enough. They are not going to be enough to pull the economy out of its sluggish pace. The Fed is probably encouraged to see some improvement in housing, though its recovery will likely remain constrained.”
TOM PORCELLI, CHIEF U.S. ECONOMIST, RBC CAPITAL MARKETS, NEW YORK
“We have to be cognizant of the fact that in recent months we were bouncing off a housing bottom. Our biggest issue is the notion that housing is gaining momentum and we would push back on that due to a number of issues. The backdrop shows housing is still far from healed, with the last few months showing decelerating jobs growth. Lending standards also remain tight and there is not a lot of demand for mortgages even with historically low rates. It is difficult to get behind the idea that we have any meaningful momentum in housing.”
VASSILI SEREBRIAKOV, SENIOR CURRENCY STRATEGIST, WELLS FARGO, NEW YORK
“The number is a disappointment, although consistent with the weakness in U.S. existing home sales. Overall, the data adds to the string of soft U.S. numbers that suggest we could see further quantitative easing from the Federal Reserve. While this may dim risk appetite a bit and help the dollar as a safe haven, ultimately this would be a negative for the U.S. currency because of the possibility of further easing.”
“The prior net revisions were up. This is the second big negative surprise in housing data. Despite today’s decline in new home sales, we see a big pickup in new and existing home sales in the second quarter. We expect they will make a significant contribution in residential investment in the second quarter.”
“This is another housing indicator after existing home sales last week showing that the sector is not really as hot as some want it to be at this point. It just shows that the recovery in housing is still pretty mild.”
PETER CARDILLO, CHIEF MARKET ECONOMIST, ROCKWELL GLOBAL CAPITAL, NEW YORK
“It’s a weak report obviously, but the small bright spot is the overhang, which has come down. Overall, it is disappointing but it I don’t see this reversing the better trend in the housing sector that we have been seeing for over a month or so.”
STOCKS: The S&P 500 and NASDAQ turned negative.
BONDS: U.S. Treasury debt prices pared their earlier losses.
FOREX: The dollar pared its losses versus the euro.
Americas Economics and Markets Desk; +1-646 223-6300