The new home sales numbers are out. "Sales of new one-family houses in May 2006 were at a seasonally adjusted annual rate of 1,234,000, according to estimates. This is 5.9 percent below the May 2005 estimate of 1,311,000. The median sales price of new houses sold in May 2006 was $235,300. The seasonally adjusted estimate of new houses for sale at the end of May was 556,000."

The $235,300 median is down from the high in February 2006 of $250,800. The inventory looks like another record:

448,000 May 2005

458,000 June

459,000 July

477,000 Aug.

491,000 Sept.

492,000 Oct.

508,000 Nov.

515,000 Dec.

525,000 Jan. 2006

533,000 Feb.

547,000 Mar.

553,000 April

555,000 May

"The median price of homes sold did decline to $235,300, a drop of 4.3 percent from the April sales price. Economists believe that the huge backlog of unsold homes will put further downward pressure on prices in coming months."

And Lennar had this out today. "Stuart Miller, CEO of Lennar Corporation said, 'After a long period of steady growth, the homebuilding industry has slowed, as evidenced by lower new orders and higher cancellation rates in many geographic markets across the country. These conditions are primarily the result of speculators exiting the market and changing homebuyer sentiment.'"

"The company warned the second half of the year would be hurt by slower new orders and higher cancellation rates. Lennar lowered its full-year earnings guidance. The company's gross margin percentage on home sales fell 1.4 percent in the quarter, due to higher sales incentives that caused declines in the Central and West regions."

"Lennar plans to cut land costs, production costs and selling, general and administrative expenses to try to partially offset the increased incentives, Miller said in a statement."

"In a note to investors following the earnings announcement, Margaret Whelan, an analyst at UBS, reduced her earnings estimates for the company for both 2006 and 2007. Whelan said that while the small decline in orders Lennar reported was 'impressive,' she believes the company is 'discounting more heavily than peers.. which will negatively impact future margins.'"