This Day On The Street
Continue to site
This account is pending registration confirmation. Please click on the link within the confirmation email previously sent you to complete registration.
Need a new registration confirmation email? Click here

Home Sales Disappoint Twice

By Diana Olick, CNBC Real Estate Reporter

NEW YORK ( CNBC) -- Sales of newly built homes fell hard in June, despite newfound optimism in the housing recovery, especially among the home builders themselves.

Signed contracts to buy new homes fell 8.4% from the previous month, according to the U.S. Commerce Department, although they are still up 15% from a year ago.

Sales levels are now at their lowest since January.

This is the second miss for housing in the same month. Sales of existing homes fell as well, despite expectations for a gain.

More from CNBC
Wall Street Legend Sandy Weill: Break Up the Big Banks
Is the UK Really in Recession?
Asphalt From Pig Manure?

The biggest drop in new home sales came in the Northeast, down 60% month-to-month, but the Northeast represents the smallest sample and is therefore highly volatile. In May it was that same segment of the country that pushed new home sales higher. The biggest June gains were seen in the Midwest, with a slight gain out West, where dwindling supplies of foreclosed homes have removed some of the competition for the home builders.

"With new home sales at current levels 75% below peak and with a run rate near 50+ year lows, new home construction has bottomed, but there is still a long bridge between a bottom and a robust recovery, as existing home inventories (shadow and otherwise) remain elevated," writes Peter Boockvar, an analyst at Miller Tabak.

These latest numbers fly in the face of rising home builder optimism and a huge run on the stocks of the public builders. Some analysts, however, have been warning that this recovery is fragile at best, given other factors in the economy, specifically lackluster job growth and poor consumer sentiment.

"Builder stocks have continued to outperform the market as demand has remained strong into summer; also, earnings and the next few macro data points should be positive," wrote analysts at Deutsche Bank earlier this week. "However, we think downside tail risk is mounting for 2H12. It shouldn't take more than muddle-through economic growth for housing recovery to continue, but the risks are that even that doesn't happen or it happens unevenly against tenuous investor optimism."
1 of 2

Check Out Our Best Services for Investors

Action Alerts PLUS

Portfolio Manager Jim Cramer and Director of Research Jack Mohr reveal their investment tactics while giving advanced notice before every trade.

Product Features:
  • $2.5+ million portfolio
  • Large-cap and dividend focus
  • Intraday trade alerts from Cramer
Quant Ratings

Access the tool that DOMINATES the Russell 2000 and the S&P 500.

Product Features:
  • Buy, hold, or sell recommendations for over 4,300 stocks
  • Unlimited research reports on your favorite stocks
  • A custom stock screener
Stocks Under $10

David Peltier uncovers low dollar stocks with serious upside potential that are flying under Wall Street's radar.

Product Features:
  • Model portfolio
  • Stocks trading below $10
  • Intraday trade alerts
14-Days Free
Only $9.95
14-Days Free
Dividend Stock Advisor

David Peltier identifies the best of breed dividend stocks that will pay a reliable AND significant income stream.

Product Features:
  • Diversified model portfolio of dividend stocks
  • Updates with exact steps to take - BUY, HOLD, SELL
Trifecta Stocks

Every recommendation goes through 3 layers of intense scrutiny—quantitative, fundamental and technical analysis—to maximize profit potential and minimize risk.

Product Features:
  • Model Portfolio
  • Intra Day Trade alerts
  • Access to Quant Ratings
Real Money

More than 30 investing pros with skin in the game give you actionable insight and investment ideas.

Product Features:
  • Access to Jim Cramer's daily blog
  • Intraday commentary and news
  • Real-time trading forums
Only $49.95
14-Days Free
14-Days Free
AAPL $117.82 -0.18%
FB $105.47 0.06%
GOOG $750.27 0.28%
TSLA $231.11 0.64%
YHOO $32.95 -0.63%


Chart of I:DJI
DOW 17,798.49 -14.90 -0.08%
S&P 500 2,090.31 +1.44 0.07%
NASDAQ 5,128.1340 +11.9910 0.23%

Free Reports

Top Rated Stocks Top Rated Funds Top Rated ETFs