US sales of new single-family homes fall 1% in June from May

26 July 2011 16:29  [Source: ICIS news]

WASHINGTON (ICIS)--US sales of new single-family homes fell by 1% in June from May, the US commerce department said on Tuesday, marking a new downturn for the sluggish US residential construction industry.

In its monthly report, the department said that sales of new single-family homes in June were at a seasonally adjusted annual rate of 312,000, down 1% from the downwardly revised figure of 315,000 in May.

The department’s initial estimate for new home sales in May had been 319,000.

The 1% decline in June followed a 2.1% fall in May from April, largely reversing gains that had been made in March and April in the wake of record-low new home sales seen in February.

The housing market is a key downstream consumer for chemicals, resins and derivative 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 represents some $16,000 (€11,200) worth of chemicals and derivatives used in the structure or in production of component materials.

With sales of new single-family homes in the range of 300,000-325,000 units, the nation’s housing construction industry is said to be “running at idle”, in the words of National Association of Home Builders (NAHB) chief economist David Crow.

The annualised pace of 312,000 units sold in June stands in stark contrast to the boom years of 2003–2006 when new single-family homes were selling at an annual rate of around 1.2m units – almost four times the current level.

The department also reported that the seasonally adjusted estimate of new houses for sale at the end of June was 164,000 units, representing a six-month supply at current sales rates.

In normal economic times, the inventory of new homes for sale would be in the range of three to five months.

The June downturn in new home sales followed last week’s news of a parallel decline last month in sales of existing residential properties, and a survey reporting that most US consumers think buying a home is a bad investment.

However, June’s negative numbers for new home sales were in contrast to a strong 14.6% jump in US housing starts for the same month. 

Also last week, the monthly NAHB survey of home builders found that they were slightly more confident of improving sales over the next six months.

($1 = €0.70)

Paul Hodges studies key influencers shaping the chemical industry in Chemicals and the Economy

By: Joe Kamalick
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