New Home Sales: Strong Gains Before Virus Shutdowns

February 25, 2020
Bottom Line: New home sales were even more robust than previously reported in January, and the gains proved robust through February amid unseasonably better weather. Sales were accelerating on a trend basis across all regions ahead of the shutdowns for the coronavirus. Early indications suggest activity continued at a solid pace through mid-March but came to a nearly complete halt in the last week. While the length of the shutdowns is still almost impossible to caveat, these data suggest that housing will be a big part of the rebound in activity amid strong demand and low mortgage rates when we are through these scary times. New Home Sales FELL by 4.4% to 765k, after the prior month was revised higher to 800k. This compared with market expectations for a decline to 750k, from the unrevised January level of 764k. Sales are now 14.3% ABOVE their year ago level, -- but they are still 44.9% BELOW their July 2005 peak. The Inventory of Homes Available for Sale FELL by 0.9% to 319k. Inventories are now 6.7% BELOW their year ago level but still 44.2% BELOW their July 2006 peak level. Combined with the decline in sales, the Months' Supply increased to 5.0 months from 4.8 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 7.8% ABOVE their year ago level and with average prices 5.3% ABOVE their year ago level.