Sales of newly built homes fell around 2 percent in May from the previous month, but that was a little better than expectations, given the lousy home builder sentiment number we got this month and the huge supply of competing existing and distressed properties.

But let’s put this monthly move in perspective, shall we?

The 319,000 sales pace is 14 percent higher than the record low set in February, but new home sales are still 77 percent below their peak in 2005, and 900,000 is considered healthy.

But how’s this for an odd statement:

“The one positive in this report was the further fall in the number of new homes for sales, from 172,000 in April to yet another record low of 166,000,” writes Paul Dales at Capital Economics. “With fewer new homes for sale than ever before, at some point homebuilding activity will have to increase, but we can’t see it happening for several years yet.”

That’s the positive??

You could look at the home prices, down 3.4 percent, which is less than the 5 percent drop in existing home prices in May. But then you have to remember all the concessions builders are throwing in, and you also have to look at the fact that the median price of an existing home is 30 percent less than that of a newly built home. How’s that for competition?

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