New Home Sales In Line, Approaches 17-Year Low

[DailyFx]

Cultivating unusually calm markets before the big Federal Open Market Committee rate decision, the Commerce Department's New Home sales report came exactly inline with the market consensus. This just so happened to follow an inline unchanged reading from the durable goods orders indicator released earlier this morning. However, while the annualized 512,000 newly built resident sales wouldn't generate any surprises, it was nonetheless a very concerning piece of data for a struggling economy. The 2.5 percent drop in activity from last month, brought overall sales to within striking distance of a fresh 17 year low. What's more, the indicator's breakdown would generate greater concern surrouning the housing market. Inventories of unsold homes rose to a 10.9 month supply from 10.7 in April and the median price dropped 5.1 percent to $231,000. Falling deeper into the worst recession in decades, the housing market threatens to lead the US economy into a recession - a far more menacing prospect with business investment fading, unemployment rising and consumer spending receeding. With foreclosures rising, lending requirements tightening and consumer confidence plummeting, the bottom in the housing depression may still be far off. - John Kicklighter, Currency Analyst for DailyFX.com