Sales of new single-family homes are down 2.5 percent in June to 697,000 after a downwardly revised 715,000 in May. The level is below the 727,000 consensus in the Econoday survey of forecasters. However, sales are up 23.8 percent compared to 563,000 in June 2022. Limited supplies of existing homes have sent homebuyers to new construction. Homebuilders have responded with increased construction of homes in the more sought-after demographics, especially for first-time buyers. The dip in June should not be read as a deterioration. It is the second highest level of sales after the May level since 707,000 in March 2022. The underlying pace of sales remains solid despite mortgage rates within reach of 7 percent for a 30-year fixed-rate mortgage.

The median price of a new single-family home is down 0.5 percent in June $415,400 which points to sales of smaller and less expensive homes. The price is down 4.0 percent from a year earlier for the same reason. The supply of homes for sale is little changed at 7.4 months' worth compared to 7.2 months in May, and much lower than the 9.5 months in June 2022.

Homebuyers who prequalified for a mortgage at a lower rate are snapping up planned new construction. Sales for homes not yet started account for 24 percent of all sales in June compared to 15 percent in May. Homes not yet completed maintained a 41 percent share in June and May, while completed homes account for 35 percent of June sales compared to 43 percent in May.

After a much higher-than-expected 763,000 annualized rate in May, new home sales in June are expected to ease back to 727,000.

New home sales measure the number of newly constructed homes with a committed sale during the month. The level of new home sales indicates housing market trends and, in turn, economic momentum and consumer purchases of furniture and appliances.

This provides a gauge of not only the demand for housing, but the economic momentum. People have to be feeling pretty comfortable and confident in their own financial position to buy a house. Furthermore, this narrow piece of data has a powerful multiplier effect through the economy, and therefore across the markets and your investments. By tracking economic data such as new home sales, investors can gain specific investment ideas as well as broad guidance for managing a portfolio. Each time the construction of a new home begins, it translates to more construction jobs, and income which will be pumped back into the economy. Once the home is sold, it generates revenues for the home builder and the realtor. It brings a myriad of consumption opportunities for the buyer. Refrigerators, washers, dryers and furniture are just a few items new home buyers might purchase. The economic"ripple effect" can be substantial especially when you think a hundred thousand new households around the country are doing this every month. Since the economic backdrop is the most pervasive influence on financial markets, new home sales have a direct bearing on stocks, bonds and commodities. In a more specific sense, trends in the new home sales data carry valuable clues for the stocks of home builders, mortgage lenders and home furnishings companies.