US new home sales jump 23.6% in June - but still near record low

26 July 2010 16:07  [Source: ICIS news]

WASHINGTON (ICIS news)--US sales of new single-family homes rose by 23.6% in June compared with May, the Commerce Department said on Monday, noting that the relative gain was so sharp because May’s sales level was the lowest on record.

The department also pointed out that June’s new home sales - at 330,000 units on a seasonally adjusted annual basis - were the second-lowest in the history of the data series and were only exceeded by May’s all-time low of 267,000.

In May, sales of single-family homes plummeted by nearly 33% from April.

In addition, the department said that June’s rate of new home sales was 16.7% below the activity seen in June a year ago.

The US housing sector apparently has entered a new downturn following the expiration of a year-long federal tax credit programme that had been available to home buyers until the end of April.

Since expiration of that $8,000 (€6,160) tax credit, there have also been sharp declines in new home construction and sales of existing residences.

The housing market is a key downstream consumer sector for the chemicals industry, driving demand for a wide variety of chemicals and chemicals-based products such as plastic pipe, insulation, paints and coatings, adhesives and synthetic fibres, among many others.

The American Chemistry Council (ACC) estimates that each new home built represents some $16,000 worth of chemicals and derivatives used in the structure or in the production of component materials.

However, the department’s new home sales data for June did show some positive news.

The inventory of unsold new homes fell in June to some 210,000 units, a 7.6-month supply at current sales rates.  That represents a nearly 21% decline and a two-month improvement from May when the inventory was at 9.6 months.

But a 7.6-month inventory of new but unsold single-family homes is still high.  During normal economic conditions, the inventory of unsold new homes would show a supply of three to five months.

($1 = €0.77)

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By: Joe Kamalick
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