New home sales surprised in a massive way this morning, blowing out all estimates to the high side.
New home sales came in at 619,000 compared to a Bloomberg Econoday consensus estimate of 523,000 at a seasonally adjusted annualized rate.
The new home sales report has sealed its reputation as the wildest set of data around. April’s annualized rate came in at 619,000 which is not a misprint. This is the highest rate since January 2008 and dwarfs all readings of the recovery. February 2015’s rate, way behind at 545,000, is the next highest rate this cycle. The data even include a very large 39,000 net upward revision to the two prior months, a gain that reflects annual revisions which are included in the data. The monthly 16.6 percent surge is not only far beyond expectations but is the biggest monthly gain since way back in January 1992.
The data also include a big jump in prices, up 7.8 percent in the month to a record median $321,100 while the year-on-year rate, which was negative in the March report, is at plus 9.7 percent year-on-year.
But the surge in sales is a negative for supply as supply relative to sales fell very sharply to 4.7 months from 5.5 months. The total number of new homes for sale was little changed, down 1,000 at 243,000.
Regional data show a more than 50 percent jump in the Northeast where however the number of sales relative to other regions is very low. The same is true of the Midwest where sales fell 4.8 percent in the month. The two main regions for new home sales both show outsized gains with the South up 15.8 percent and the West up 23.6 percent.
Year-on-year, total sales are suddenly up 23.8 percent, this at the same time that the median price is now well past the 6 percent rate where housing appreciation had been trending. Even though new home sales are volatile, which reflects the report’s small sample sizes, the outlook for housing just got a big boost. Talk will build for a greater contribution from housing to overall growth. Watch for FHFA house price data on tomorrow’s calendar where another month of solid appreciation is expected.
New Home Sales
Sales Up Everywhere But Midwest
ZeroHedge is a bit skeptical, noting the report is a 17 sigma event.
This data is indicative of a hike, so much that one might wonder if the Fed had a leak to the commerce department report.
This is quite amazing to say the least.
Mike “Mish” Shedlock
Aaron Layman Properties said:
This report is BS.
Just more cooked numbers………
Not amazing in the least, Mish. My local market for houses in the low end has completely dried up starting last December. The last offer I made in early April on a rental was for full price, no conditions, and it was rejected in lieu of them keeping it as a rental. Every bank-owned property in town that I know of is just sitting vacant and not on the market in any capacity. People smelled this coming on months ago. They apparently expect much higher prices for housing.
Wrecks of a house around 1000 sf that sold last winter for under $60k are now coming back on the market for over $200k after a new kitchen, flooring, roof, and paint job (at most $50k in impovements!)…..and selling within days. It’s crazy. Talk about buying a pig with lipstick.
The gravy train that was the 2008 panic is over. The Fed will get it’s way. It always does as long as they control the money supply.
Tony Bennett said:
“The Fed will get it’s way”
Sure … until it doesn’t
Next bust on doorstep
Very simple, Chinese and Indian buyers. Ask any agent in Florida, at least in Tampabay. Foreign money accounts for most of the business.
I just wonder about it though, thinking about what happened last time the Japanese bought Rockefeller center.
Exactly my first thought… how do we know the buyers are Americans ?
In many areas Chinese buying is causing the price of real estate to climb, pricing out the average American.
In my area of Bergen County (northern) NJ, it’s Koreans keeping the prices high.
Purely anecdotal, but home sales here (western oregon, from eugene-to-portland) have been red-hot for 2-3 months now… lots of new listings, but also more sales/closings than the previous 6-8 months combined.
There’s been alot of new multi-family & apartment construction out here for the past 4 years… many of these units are finally selling, too.
I can understand people wanting to move to this region, but we (everyone here) are wondering how people are moving here… yes, home sales/construction are up, but why/how? The economy here is as sluggish as ever & the job market is down… so how are people buying homes & moving here w/o jobs/income? It doesn’t add up.
There is a lot of pent up demand from millennials living in their parents basement. Percentage of age 20-32 population(80M) living that way is up to 32% from mid-20’s in 2008-2009. That’s 5 million extra people who “should” be living in their own place that are not. Housing will be very strong for the next decade, and not just in your neighborhood.
chris m said:
Please dont give us that bs about something being a 17sigma event.
you need to normalise your data first, and then determine as to whether any data
is +/- x standard deviations from the mean.
normalise generally means transforming the data in the most simple way possible,
and seeing if an histogram of the transformed data can be described
as normally-distributed. ( and that would imply that entire transformed data set
has max standard deviation at +/- 3
I don’t know precisely how many sigmna it was – that was ZH. But it was more than 3. Those were amazing numbers.
Michael Rudmin said:
what I’ve seen, both the household debt down and the new home sales up make sense. I was going to try to buy a farmette, credit score of 850, but since the land value was more than the house, the one bank that said they could do it bailed. Therefore, I bought two tiny noncomforming plots at tax auction instead.
Household debt down.
On the other hand, they and anyone else were more than hasty to lend money to overextended VA-qualified people.
Why? Free profit with a 100% guarantee. They were also quietly encouraging me to instead by a big house for a lot of money on no land, because they currently view that as low risk.
I beg to differ. The land I was buying can produce income. The house cannot. The land I was buying cannot fall in value. The house can fall apart during the next vacancy. But the bank may think that houses will be bailed out, whereassback inthe Great Depression land lost bubble value badly.
The banks have no idea what’s going on except in government, but they control the flow of money, and new houses is what they like right now.
I think these numbers are true, and should indicate the style of the next crash.
These are not “home sales”. They are “successful applications for lifetime debt”.
But in these perverse days any rise in CREDIT uptake somehow equals more WEALTH…
The animal spirits are alive and well. My co-worker transferred from Boston and put his house on the market. No one was shown the house the first 5 days until the open house on the weekend. By the end of the weekend, he had 15 offers, and 5 were above asking price. I’m glad for him as he rents an apartment for the next year.
Looks like the beginning of something big. Sure wouldn’t want to be out of the housing market here. Just as the Fed intended, with their interest hike talk, folks don’t want to be left behind when rates go into orbit. And really, who still believes they will go negative here in the land of the reserve currency?
And no, it’s not different this time. As long as there is a Fed, there will be booms, busts and dollar devaluation. Looks kinda like the stagnation evident since 2009 is coming to an end. This it the way stagflation ended in the late 70’s, as well, leading to Volcker’s double digit interest rates.
7-9% “growth” (devaluation) will return. It’s the only way TPTB can remain in power at this point.
Will this be the Crackup Boom? Or is there one more behind this one? Who knows,,,but one thing is sure. Cash will be trashed.
Given a choice between tangibles and bonds here, all I can say is Duh?