All things considered, good news for the U.S. economy from the Commerce Department today. New home sales in July rose by a startling 9.6 percent, month over month, far above expectations. Orders for durable goods also jumped by 4.9 percent. Both readings were the largest month-to-month percentage increases in recent memory.
Caveats, as usual, apply. The margin of error for new home sales sampling is very high, so those stats need to be viewed warily. (Although it should be noted that the Commerce Department revised the figures for May and June upward, so fears that the data were overstating the reality in those months appear to have been unwarranted.) New home sales in July were still 13.4 percent lower than the rate registered one year ago, and the median price of a new home dropped 12 percent from last year. As for durable goods orders, if transportation goods (read: planes) are excluded, the rise was only 0.8 percent, which was actually .1 percent less than economists were predicting.
But perhaps most important, the number of months it would take to sell off the existing inventory of new homes dropped to 7.5, the lowest level since April 2007, suggesting that excess supply is finally being worked out of the market.
The shoots? Today they are very green.