New home sales plunged to a seasonally-adjusted annualized rate (SAAR) of 571,000.
That was far lower than even the lowest Econoday economist’s estimate of 590,000.
The Econoday consensus was 610,000 in a range of 590,000 to 622,000. Nonetheless, Econoday was happy about a number of things.
Overstating weakness, July’s headline for new home sales fell to a far lower-than-expected annualized rate of 571,000. This is offset, however, by upward revisions totaling 33,000 in the two prior months which now stand at 630,000 and 618,000. This series, where sample sizes are low, is often volatile month-to-month with the 3-month average, still over 600,000 and just off expansion highs, telling the more reliable story.
The best news in July’s report is an increase in supply, up 4,000 to 276,000 new homes on the market. Relative to sales, supply moves from 5.2 months to 5.8 months which is nearly at the 6 month mark which is widely considered to be balanced for new homes.
Prices are showing increasing traction, up 0.7 percent in the month to a median $313,700. This is up 6.3 percent year-on-year which is roughly in line with prices of existing homes.
The strength in pricing is good news for residential investment but not for first-time buyers who are being priced out of the new home market. The downdraft in July’s data aside, new homes are probably still a positive for the housing sector which has been trending higher in fits and starts all year. Watch tomorrow for existing home sales where strength is the expectation.
Worst Annual Pace in 3 Years For New Home Sales
Mortgage News Daily had a different take in its report, Worst Annual Pace in 3 Years For New Home Sales.
New home sales in July were expected to remain steady after scoring a slight gain in June, instead they plunged to a rate even lower than those a year earlier. Three of the four geographic regions shared in the decline,
Sales of newly constructed homes in July are estimated at a seasonally adjusted annual rate of 571,000 units. This is down 9.4 percent from June and 8.9 percent from the estimate for July 2016. The bad news was mitigated a bit as the U.S. Census Bureau and the Department of Housing and Urban Development revised their earlier June estimate to 630,000 units from their original estimate of 610,000.
New Home Sales 1963 to Present
On a historic basis and especially on a population-adjusted basis, new home sales are pathetic. They would have been pathetic even if the Econoday consensus estimate was reached.
New Home Sales Percent Change From Year Ago
Year-over-year, new home sales are down almost 9 percent. Since 2012, such declines have been taken back. The result is the slow uptrend red line in the first chart.
As always, Econoday cheered “price traction”. The Econoday Keynesian parrot is always happy when people get less for their money.
It’s far beyond the parrot’s comprehension, but one of the reasons new home sales are pathetic because few can afford them.
Moreover, the attitudes of millennials towards homes, material things, and family formation have changed. Attitude shifts have not hit bottom yet, and may not for another generation or longer.
Mike “Mish” Shedlock
Unexpected October surprise in the making?
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“Mortgage rates are too damn high!”
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Must have been another nearly impossible “surprise” to these clowns…Meanwhile, Barbarians at the gates…http://thehill.com/blogs/blog-briefing-room/news/347341-christopher-columbus-statue-in-baltimore-smashed
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I believe the best is behind us now. While it is entirely probable that the White House and Congress will agree tax cuts when the going gets rough, and that this will give a short term fillip to shares, in the longer run it will aggravate the underlying problems in the economy. The evidence coming out of China where they have already spent the 2017 stimulus in preparation for the Congress is another headwind. The unexpected fall in single new properties may have something to do with the Chinese effect.
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About those tax cuts.
FY2016 deficit $585 billion. FY2017 (year ends september 30th) deficit projected to be almost $700 billion (way over not too long ago forecasts). US going to cut taxes NOW? And push deficit close to a $trillion … and not even in a (recognized) recession?
These aren’t my Granddaddy’s “Conservatives” …
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“This is down 9.4 percent from June and 8.9 percent from the estimate for July 2016. The bad news was mitigated a bit as the U.S. Census Bureau and the Department of Housing and Urban Development revised their earlier June estimate to 630,000 units from their original estimate of 610,000.”
…
This report not too bad. Besides June upward revision, prior 2 months revised up, as well.
April 577K —> 590K
May 605K —> 618K
And the year over year plunge courtesy of big spike July 2016.
June 2016 … 559K
July 2016 … 627K
August 2016 … 567K
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The problem is that once the government manufactures numbers (and it proven it does so), no statistics emanating from Big Brother are trustworthy
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Chart: 2005. The year Alan Greenspan thanked bankers for getting people into houses they otherwise could not afford. After another spike higher, new home sales collapsed.
“On a historic basis and especially on a population-adjusted basis, new home sales are pathetic.”
The after effect of a bubble, the purpose of which, was to get people who could not afford a house, into one- temporarily.
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Everything is backwards, why can’t the FED see that?
There are 10,000 people a day turning 65. I’ll bet despite what we’re told in the press a fair number of them would like to retire. But because they have to keep themselves in high-risk investments when they should already be in CD ladders and other guaranteed return investments they’re too afraid to quit. The certainly aren’t going to risk moving to an area where they might want to retire to, especially since they’ve been refinancing their mortgages over and over to take advantage of lower interest and tax deductions.
So if I were in charge of things, the first thing I’d do is have the FED/central bankers raise interest rates, or at least stop keeping them artificially low. That way boomers could move their money out of the stock market in an orderly manner, exit the work force and move to Florida (or wherever). Then their kids and grandkids could move into the workforce, buy houses in the parts of the world where the jobs are and maybe figure out that they really do need more than 200 Sq Feet to start a family in.
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The lower trend line MISH drew is being challenged. Once its support is broken, look out below.
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The Fed stole everyone’s savings. Bernanke and Yellen stole more money than every bank robber that ever lived — and law enforcement helped them do it.
Meanwhile, no one really needs a 50,000 sq ft McMansion or the property taxes that go along with it.
Where is the mystery here? Who can’t figure out why a declining population with no savings isn’t running around buying new houses?
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You are correct. The US is facing a very big demographic challenge. Too many old people, no longer working, and too few young people to support them.
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Who wants to own a house with that kind of president in charge.
Stay mobile to get out of this mess on a minute’s notice – which means no immobile investments for the time being.
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You said it, my friend! I store all my gold and silver coins in the seats of my RV that I use both as transportation and housing. That way I can always be ready to stay mobile to get out of the mess on a minute’s notice. I pulled all my stocks and put them into gold in March of 2009 right after I sold my house. Two great financial decisions right there my friend!
This whole things gonna blow again, just like it did last time. They always say the same bubble isn’t blown twice, but I don’t believe em. This time tech AND housing are going to explode simultaneously. Then I’ll swoop in and buy me a mansion with all my gold and silver coins. It will be glorious.
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Looks like there was 20 years where building was about twice the long term rates 1990 to 2010. If the long term rate reflects replacement and population increases then should the average rate over the next 20 years be about half the average from 1963 to 1990 to bring things back to normal (from about 600K to 300K ). Maybe another spike in 2090 to 2110 as the 21st century overbuilding decays and fall apart finnaly.
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