Weirdness: New Home Sales Way Up, Prices Way Down

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The monthly report on new home sales is known for its volatility, and doesn’t tell us much about Los Angeles -- this market is not driven by new home construction -- but today’s report was so weird, it’s worth delving into it a little bit.

Headlines: new-home sales jumped 16% in April from March levels, but median sales price declined 11% -- both are big swings. Strong sales in the South skewed the numbers; new home sales in the West grew 8.5%.

So does this mean housing is hitting a bottom? Beginning to recover? I certainly don’t know the answer, but stock investors viewed this as a sign of a housing bottom, which they think is bad news for stocks, because they were hoping housing would continue to be weak enough to justify a Fed rate cut, which is what they want. Thus, perceived good news on housing was bad news for stocks today.

Comments? Other interpretations? Photo Credit: Reuters