by Calculated Risk on 8/25/2014 12:31:00 PM

The new home sales report for July was weak with sales at a 412,000 seasonally adjusted annual rate (SAAR), however combined with the upward revisions for the previous three months, total sales were somewhat above expectations.  Sales for April, May and June were revised up a combined 33,000 sales SAAR.

The Census Bureau reported that new home sales this year, through July, were 266,000, Not seasonally adjusted (NSA). That is down 0.8% from 268,000 during the same period of 2013 (NSA).  Basically flat compared to 2013.

Sales were up 12.3% year-over-year in July - but remember sales declined sharply in July 2013 as mortgage rates increased - so this was an easy comparison (I expect sales for July will be revised up too).

Click on graph for larger image.

This graph shows new home sales for 2013 and 2014 by month (Seasonally Adjusted Annual Rate).

The comparisons to last year will be easy for the next couple of months, and I still expect to see year-over-year growth later this year.

And here is another update to the "distressing gap" graph that I first started posting several years ago to show the emerging gap caused by distressed sales.  Now I'm looking for the gap to close over the next few years.

The "distressing gap" graph shows existing home sales (left axis) and new home sales (right axis) through June 2014. This graph starts in 1994, but the relationship has been fairly steady back to the '60s.

Following the housing bubble and bust, the "distressing gap" appeared mostly because of distressed sales.

I expect existing home sales to decline or move sideways (distressed sales will continue to decline and be partially offset by more conventional / equity sales).  And I expect this gap to slowly close, mostly from an increase in new home sales.

Note: Existing home sales are counted when transactions are closed, and new home sales are counted when contracts are signed. So the timing of sales is different.