New Home Sales: Huge Jump in South Suggests Hurricane-Related
October 25, 2017
Bottom Line: New home sales jumped in September, led by an increase of 83k units in the South, nearly a 26% increase over August. While offering no new clarity on hurricane impacts in September, the Census Bureau noted last month 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. Recall that new home sales data are based on contract signings, so it is likely that many new contracts were signed for replacement housing in September. Finally, while the trend will be difficult to ascertain given the hurricanes, sales over the last three months have averaged 603K and are 0.1% below the 6 month average of 604K, suggesting the trend is still just steady, despite the volatility. New Home Sales ROSE by 18.9% to 667k, after the prior month was revised higher to 561k. This compared with market expectations for a decline to 554k, from the unrevised August level of 560k. Sales are now 17.0% ABOVE their year ago level, -- but they are still 52.0% BELOW their July 2005 peak. The Inventory of Homes Available for Sale was UNCHANGED at 279k. Inventories are now 15.3% ABOVE their year ago level but still 51.2% BELOW their July 2006 peak level. Combined with the increase in sales, the Months' Supply dropped to 5.0 months from 6.0 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 1.6% ABOVE their year ago level and with average prices 5.2% ABOVE their year ago level.
Article by Contingent Macro Advisors