Having hovered at its lowest level since January 2014, Markit’s US Manufacturing PMI slipped even further to 53.4 (against expectations of 54.1). This is the weakest since October 2013 and the biggest miss since August 2013. Stunned, Markit notes, “while the survey data points to the economy rebounding in the second quarter, the weak PMI number for June raises the possibility that we are seeing a loss of momentum heading into the third quarter;” which is odd because every talking head has been proclaiming everything is awesome, “while a September rise still looks likely, given the ongoing strength of the service sector, any further deterioration in the data are likely to push the first hike into next year.”
Well this is not what The Fed promised…
What is the reason for the non-existent new home sales rebound? Simple: the following chart comparing total new home sales and the median new home sales price explains it.
Because while the US housing market suffered a depression-level collapse after the housing bubble burst in 2006, median new home prices had a modest dip and proceeded to levitate to new record highs without interruption until the last few months of 2014, when they hit an all time high of just over $300,000. Since then they have fallen to $282,800 but clearly they have a long way to go to match the implied supply/demand dynamics seen the last time housing sales were at this level. In fact, one can say that new home prices are about 3 times higher than where they should be to promote a housing recovery for “the rest of us” and not just Chinese “investors” and foreign oligarchs (who are buying existing homes anyway instead of new homes).
Source: [Zero Hedge]