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New Home Sales: Sharp Downward Revisions but Trend is Still Up Amid Volatility

October 26, 2016
Bottom Line: New home sales rose less than expected in September and there were sharp downward revisions to August data. Despite this volatility, the upward trend in new home sales continues at a modest pace. The 3-month average now stands at 599k units, above the 6-month average of 582k and the 12-month average fo 550k. Expect more volatility in this data going forward as most of the revisions were in the South -- and forecasts for Hurricane Mathew were only just developing at the end of this reporting period. Home prices increased modestly with the median reported price up 1.9% versus a year ago. And months supply continues to contract, a trend we are seeing across housing data.

New Home Sales ROSE by 3.1% to 593k, after the prior month was revised lower to 575k. This compared with market expectations for a decline to 600k, from the unrevised August level of 609k. The trend is rising and sales are now 29.8% ABOVE their year ago level, -- but they are still 57.3% BELOW their July 2005 peak.

The Inventory of Homes Available for Sale FELL by 0.4% to 235k. Inventories are now 6.3% ABOVE their year ago level but still 58.9% BELOW their July 2006 peak level. Combined with the increase in sales, the Months' Supply dropped to 4.8 months from 4.9 months. This is modestly BELOW a normal level of 6.0 months and well BELOW its peak of 12.2 in January 2009.

Home Prices ROSE with median prices 1.9% ABOVE their year ago level and with average prices 2.7% ABOVE their year ago level.