The Census Bureau reports New home sales are down again, with median prices weakening sharply.
Net sales revisions for June and July were negative. In addition, year-over-year sales are negative.
Sales were down in the South, the West, and Northeast, so don’t blame the hurricanes.
Economists Surprised Again
Economists were surprised by another month of weak new home sales.
The Econoday consensus estimate was 583,000 at a seasonally adjusted annualized rate (SAAR) but sales came in at 560,000 SAAR.
Weakness in the South pulled down new home sales in August as it did in last week’s existing home sales report. New home sales fell sharply in the month to a 560,000 annualized rate vs an upward revised rate of 580,000 in July and a downward revised 614,000 in June (revisions total a net minus 7,000).
Sales in the South, which is by far the largest region for housing, fell 4.7 percent in the month to a 307,000 rate for a year-on-year decline of 9.2 percent. But importantly, sales in the West and Northeast were also lower, down 2.6 and 2.7 percent respectively, with sales in the Midwest unchanged.
September, in fact, was a weak month for housing demand, evident in this report’s median price which fell a very sharp 6.2 percent to $300,200. Year-on-year, the median is up only 0.4 percent which, in another negative, is still ahead of sales where the yearly rate is minus 1.2 percent.
Builders, despite late month disruptions in the South, moved houses into the market, up 12,000 to 284,000 for a striking 17.8 percent yearly gain that hints at a glut. But supply had been so thin that the balance is now at a traditional level, at 6.1 months vs 5.7 and 5.3 months in the prior two months and 5.1 months a year ago.
Hurricane effects are likely in the next report for September with the South to continue to suffer. But today’s data do mark a shift, one of softening sales nationally, which is a short-term weakness, and a rebalancing in supply which is a long-term strength. Yet for the 2017 economy, the housing sector looks to be ending the year in weakness, some of it hurricane-related.
Expect downward revisions in GDP estimates for the third and fourth quarters.
Mike “Mish” Shedlock
ZIRP, QE and all of Keynesian central planning fails again…
Wake me up when the talking heads at CNBC stop kissing Bernanke’s rear end. I’m going to keep decorating my “I told you Bernanke is an idiot” sign.
Re Bernanke’s (and FOMC’s) credibility.
Napoleon’s Moscow Campaign map comes to mind.
The start of balance sheet reduction = start of Moscow retreat.
https://philebersole.files.wordpress.com/2011/05/napoleon.jpg
Oh, and don’t blame tightening credit
Fannie Mae yesterday:
“Facing constrained mortgage demand and a negative profit margin outlook, more lenders say they have eased rather than tightened home mortgage credit standards, according to Fannie Mae’s third quarter 2017 Mortgage Lender Sentiment Survey®. Across all loan types – GSE Eligible, Non-GSE Eligible, and Government – the net share of lenders who reported easing credit standards over the prior three months reached a new high since the survey’s inception in March 2014, after climbing each quarter since Q4 2016.”
http://www.fanniemae.com/portal/research-insights/surveys/mortgage-lender-sentiment-survey.html?utm_content=sf116570813&sf116570813=1
And Hoo knows what new home prices truly are?
Builders can throw in all kind of freebies – especially in a softening market – to get a signed contract.
NAR will spin it as lack of inventory is crimping sales…
None of this matters. The market is up again! The law of gravity has been repealed. To infinity and beyond! Janet says so!
Economists can’t blame hurricanes? Maybe the cause then is earthquake swarms and volcanoes…
Remember one economist said replacing hurricane damage would be good for the economy. So hurricanes can’t be both bad and good.