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New Home Sales: Smaller Rebound, Trends Counter to Existing Home Sales

February 24, 2017

Bottom Line: New home sales rose modestly less than expected in January. Sales over the last three months have averaged 555K and are 0.9% below the 6 month average of 560K. The months supply held steady at 5.7 months. This runs counter to the very low months supply seen in existing home sales. While new home sales are small relative to existing home sales, it may indicate that new homes are not located where new homeowners wan to live. Overall the trend in new home sales remains positive.

New Home Sales ROSE by 3.7% to 555k, after the prior month was revised lower to 535k. This compared with market expectations for an increase to 571k, from the unrevised December level of 536k. Sales are now 5.5% ABOVE their year ago level, -- but they are still 60.0% BELOW their July 2005 peak.

The Inventory of Homes Available for Sale ROSE by 3.5% to 265k. Inventories are now 10.9% ABOVE their year ago level but still 53.7% BELOW their July 2006 peak level.

Combined with the increase in sales, the Months' Supply was unchanged at to 5.7 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 were MIXED with median prices 7.5% ABOVE their year ago level and with average prices 1.3% BELOW their year ago level.

Article by Contingent Macro Advisors