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New Home Sales: Surprise Negative Revisions, Trend Still OK

November 24, 2021
Bottom Line:  New home sales rose slightly in October, but there were significant negative revisions to September data that skewed the overall report negatively. While these revisions offer hints of concern, the overall level of housing activity remains robust and most housing data suggest activity re-accelerated moderately after cooling from 2020's torrid pace.  Overall, housing has plateaued but is not necessarily heading lower. The trend rate of sales remains higher than at any point since the financial crisis. While supply remains very tight in the existing home market, builders have been able to steadily increase supply to meet demand for new homes, despite supply chain constraints.
New Home Sales ROSE by 0.4% to 745k, after the prior month was revised lower to 742k. This compared with market expectations for a decline to 800k, from the unrevised September level of 800k. Sales are now 23.1% BELOW their year-ago level.

The Inventory of Homes Available for Sale
ROSE by 2.9% to 389k. Inventories are now 37.0% ABOVE their year-ago.
Combined with the increase in sales, the Months' Supply increased to 6.3 months from 6.1 months. This is modestly ABOVE a normal level of 6.0 months.
Home Prices ROSE with median prices 17.5% ABOVE their year-ago level and with average prices 21.1% ABOVE their year-ago level.