New Home Sales seen slipping in June 2008
July 25 2008 - Sales of new homes likely fell in June from May amid tighter credit, high mortgage rates, falling employment and declining consumer wealth.
New home sales are seen dropping to a 500,000 annual rate from 512,000 in May, based on a Reuters survey of 68 economists. Forecasts ranged from 480,000 to 540,000.
Sales fell 2.5 percent in May.
Borrowers continue to face higher hurdles getting loans approved by mortgage lenders, many of whom were burned by subprime loans and as a result are much more restrictive, and builders are grappling with high inventories of unsold houses.
Potential owners are fearful of buying a home whose value could fall soon after purchase, some economists say.
The Commerce Department’s report on new home sales is scheduled for release at 10 a.m. ET on Friday.
Here is a selection of comments from economists:
BANK OF AMERICA:
FORECAST: 512,000
“It also appears that during the last 3 months, new single-family home sales have begun to stabilize within a range of 500,000 units and 525,000 units. We are also projecting that June’s new home sales falls within this range. With headwinds of tighter credit conditions and high mortgage rates, falling employment and declining wealth, a recovery in housing demand is not likely until 2009.”
STEVEN A. WOODS, INSIGHT ECONOMICS, DANVILLE, CALIFORNIA:
FORECAST: 500,000
“New Home Sales dropped further in June. Potential home buyers are hesitant to commit to purchases because of the continuing decline in home prices and the increased difficulty in securing new mortgage loans. New home sales have declined by 40.3 percent in the 12 months ended in May and by 63.1 percent from their July 2005 peak. However, somewhat encouragingly, new home sales have been little changed over the past several months.”
ACTION ECONOMICS:
FORECAST: 512,000
“Our expectation for new home sales matches with our forecast for flat existing home sales, with stability in both measures suggestive that a bottom is forming in home sales.”