New Home Sales Data Shows That A Bottom Has Been Reached

Better-than-expected data today on New Home Sales is another feather in the cap for those looking for a bottom in new housing. Some analysts are even calling the debate now over.

Data today from the Commerce Department showed that sales of new one-family houses in June 2009 were at a seasonally adjusted annual rate of 384,000. This was an 11% rise from the revised May rate of 346,000 and was above the consensus of 352,000. The figure is still 21.3% below the June 2008 estimate of 488,000.

The median sales price of new houses sold in June 2009 was $206,200; the average sales price was $276,900.

The inventory of new houses for sale at the end of June was 281,000, or 4.1% lower than May. The new houses for sale represents a supply of 8.8 months at the current sales rate. This represents a drop from 10.2 months in May and is the first drop below 9.0 months since August 2007.

The news sent shares of homebuilders 2% higher, as represented by ETF SPDR S&P Homebuilders (NYSE: XHB). Some of the best performers in the group included Lennar Corp. (NYSE: LEN) +5%, Pulte Homes Inc. (NYSE: PHM) +6%, Beazer Homes USA Inc. (NYSE: BZH) +14%, Hovnanian Enterprises Inc. (NYSE: HOV) +8%, Ryland Group Inc. (NYSE: RYL) +6%

Analysts at Wells Fargo said the data makes the debate about a "bottom" for new housing "over." The firm is confident we will not retest January's lows of 329,000. That said, the firm said at 1.4x current tangible book and 1.5x their 12-month book estimates, it is difficult for them to view the homebuilder stocks as "inexpensive."

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