New Home Sales: Trend Shift Continues
September 26, 2018
Bottom Line: Continuing a string of weaker housing data, new home sales in August were just a touch slower than expected but were revised sharply lower for prior months. Sales over the last three months have averaged 618K and are now 2.7% below the 6 month average of 636K, suggesting a weakening trend. The months supply dropped slightly as sales rose and inventories rose. New home prices continued to climb relative to their year ago levels, though, suggesting affordability has hampered sales activity as mortgage rates rose -- this report covers sales through August, not yet reflecting the September push to the highest rates since 2011. New Home Sales ROSE by 3.5% to 629k, after the prior month was revised lower to 608k. This compared with market expectations for an increase to 630k, from the unrevised July level of 627k. Sales are now 12.7% ABOVE their year ago level, -- but they are still 54.7% BELOW their July 2005 peak. The Inventory of Homes Available for Sale ROSE by 1.6% to 318k. Inventories are now 13.2% ABOVE their year ago level but still 44.4% BELOW their July 2006 peak level. Combined with the increase in sales, the Months' Supply dropped to 6.1 months from 6.2 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 1.9% ABOVE their year ago level and with average prices 5.2% ABOVE their year ago level.
Article by Contingent Macro Advisors