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New Home Sales: Fall in August with Modest Upward Revisions in July

September 26, 2017

Bottom Line: Bottom Line: New home sales fell again August, in-line with our expectations but sharply below the consensus. There are no reliable estimates available yet of the impact from Hurricanes Harvey and Irma. However, the Census Bureau included a note in this report that the counties in Florida and Texas where disasters were declared account for 14% of the total US single-family housing stock and 27% of the South region.

With the caveat that data are less reliable than usual, the trend in housing appears to be slowing. Months' supply rose as sales prices fell. The 3-month averages for both sales volume and prices are below the 6-month averages.

New Home Sales FELL by 3.4% to 560k, after the prior month was revised higher to 580k. This compared with market expectations for an increase to 585k, from the unrevised July level of 571k.

Sales are now 1.2% BELOW their year ago level, -- but they are still 59.7% BELOW their July 2005 peak.

The Inventory of Homes Available for Sale ROSE by 3.6% to 284k. Inventories are now 17.8% ABOVE their year ago level but still 50.3% BELOW their July 2006 peak level.

Combined with the decline in sales, the Months' Supply increased to 6.1 months from 5.7 months. This is modestly ABOVE a normal level of 6.0 months and well BELOW its peak of 12.2 in January 2009.

Home Prices ROSE with median prices 0.4% ABOVE their year ago level and with average prices 3.7% ABOVE their year ago level.

Article by Contingent Macro Advisors