New-Home Sales Uptick: Another Mirage?

The Lehmann Letter (SM)
We’ve been crawling for so long in the housing-rebound desert that any sign of an oasis raises suspicions of another mirage.
For instance……….
This morning the Census Bureau announced 369,000 new-home sales in May.
Take a look at the chart and the latest report seems unremarkable. New-home sales have stagnated under 400,000 since the depths of the recession. We will have cause to cheer when sales break through 400,000 and then 600,000 and maybe even 800,000. But sales under 400,000 hardly seem cause for celebration.
New Home Sales
(Click on chart to enlarge)

(Recessions shaded)
But there were other (optimistic) data in the report. The supply of new homes for sale fell from 6.6 months to 4.7 months over the past year, while the number of new homes for sale fell from 169,000 145,000. Let’s hope the glut of homes on the market has shrunk to a level that will spur new building.
We’re weary of mirages.
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© 2012 Michael B. Lehmann