November new home sales came at a seasonally adjusted annualized rate (SAAR) of 490,000 vs. an economic consensus of 503,000. Worse yet, October’s big gain was revised sharply lower from 495,000 to 470,000.
This is going to take a bite out of GDP estimates. Nonetheless Bloomberg manages to spin this as a big positive.
Rising construction is bringing supply into the housing sector and helping to lift new home sales, which rose 4.3 percent in November to what is still however a lower-than-expected annualized rate of 490,000. The month-to-month gain follows a very strong 6.3 percent rise in October which, however, has been revised sharply lower to 470,000 from an initial 495,000. Houses for sale rose 5,000 in the month to 232,000 which is up from 210,000 in November last year. At the current sales rate, supply is at 5.7 months which, because of the rise in sales, is down slightly from October. Still, rising permit data point to more homes coming into the market.
Price data are also constructive, up 6.3 percent in the month to a median $305,000 with the year-on-year, which had been negative, up 0.8 percent. Still, this is a modest year-on-year rate and, relative to the very strong 9.1 percent year-on-year sales gain, points to discounting. Prices in this report appear to have room to move higher.
Regional sales data have the West up more than 20 percent in the month with the year-on-year rate at plus 4.7 percent. Sales in the South, which is by far the largest region, rose 4.5 percent in the month for an outstanding year-on-year gain of 19.4 percent. The Midwest and Northeast both show monthly and yearly declines.
Sales of existing homes have been limping along but sales of new home sales, despite all the monthly volatility which is routine for this report, are solid and look to remain solid.
October’s gains were revised to+6.3% from an initial reported gain of 10.7%. That would sound good except for the 12.9% plunge in September.
Bloomberg claims “new home sales are solid and look to remain solid” but that puts a bright coat of paint on a rather dull-looking reality.
New Home Sales
Volatility makes it hard to precisely determine the trend, but I took a stab in purple.
From May 2014 through February of 2015 home sales were generally strengthening. As with manufacturing, the trend has been generally weakening since then.
New One Family Homes Sold
Does that “look to remain solid”? Is that “solid” in the first place?
Mike “Mish” Shedlock