Sales of new single-family homes are up 4.4 percent in July to 714,000 units after a small downward revision in June to 684,000 units. The level in July is 31.5 percent higher than July 2022 and slightly above the consensus of 705,000 units in the Econoday survey of forecasters. July likely got a boost in sales as those who prequalified for a mortgage in May or June acted to close a purchase before losing the lock on a lower rate. The Freddie Mac averaged 30-year fixed rate for a mortgage was 6.50 percent in May, 6.70 percent in in June, and 6.85 percent in July.

Sales of new homes in July also benefited from lack of supply in the existing home market. Potential homebuyers continue to purchase a new home where they can find something comparable to what they want in an existing home. There is also the advantage of being able to buy a home that is not yet started or under construction before rates and prices climb any further.

There was a 7.3 months' supply of new homes available for sale in July, down slightly from 7.5 months in June, and below the 10.1 months supply in July 2022. The median price of a new single-family home climbed 4.8 percent in July to $436,700 after $416,700 in June. Much of the homebuying market has shifted to smaller units that are more affordable and appealing to entry-level buyers. But competition for supply is keeping prices up.

Homebuilders are cutting back on new construction to avoid a buildup of unsold units now that mortgage rates are topping 7 percent and there are fewer buyers out shopping. In July, the number of units sold that were not yet started was 13 percent, below the 17 percent in June. Homes under construction accounted for 47 percent of units sold in July and completed units were 40 percent of all units sold.

Today's results leave Econoday's Consensus Divergence Index at plus 15 to indicate that US data, on net, are safely exceeding economist forecasts.

New home sales in July, a month before mortgage rates began their spike, are expected to edge higher to a 705,000 annual rate after slowing to 697,000 in June which, though lower than expected, was still the second highest rate in more than a year.

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.