Jul 28 2009
U.S. New House Sales Report Yesterday – How Significant is it as a Sign of Recovery?
Yesterday it was reported that U.S. New House sales increased by 11% in June over May (in units 384,000 versus 346,000), and at the same time the Libor Rate (the London Interbank Offered Rate) fell below 0.5%, the latter thought by some to be the ‘strongest signal yet that confidence has returned to the credit markets’ – see article discussing these things by clicking here. That said, at the high of the ‘boom’ in post-2000 U.S. house sales – reached in July, 2005 – were 1.4 million in one month. At the same time the average house price fetched in June decreased from May to $206,200, 11.2% less than the average house price in July 2005 ($229,500). For me it follows, consistent with my ongoing commentary to pay attention to absolutes and not percentages, that while it is clear U.S. New Home Sales increased month/month in June there is no reason to jump to a conclusion that ‘all is well with the U.S. economic world’ and that near-term meaningful recovery is ensured any time soon.
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It was also reported that the UK housing market had also seen a positive movement.. Hopefully this is the sign of things starting to pick-up?