New Home Sales: Decent Print

Today the U.S. Census Bureau reported on for the month of September.  New home sales were 593K, a  miss from the 600K estimates, and only higher, month to month, due to a revision of the prior month from 609K to 575K.

Sales of new single-fam houses in Sep 2016 were 593k (SAAR) up 3.1% (+/-16.2%)* from Aug


For years, my theme for new home sales has been slow and steady growth.   This cycle started off from the lowest point of sales ever recorded in U.S. history, with that thesis you can expect growth. However, we are experiencing the weakest demand curve for new home sales ever, even with the lowest interest rates curve ever.

With that said, we are roughly 1 year to 2 years away from pulling out of that historic low numbers.  After that,  we can expect to see if  new home sales have the capacity to grow past 675K-775K. Once we start a year from a 675K-775K level, then we lose the very low bar thesis from housing.

The report also shows that the median new home price jumped. This means there are a larger number of bigger homes being sold. For new homes sales to get real traction in the market the sale of larger homes needs to slow compared to the sale of smaller homes.  Still we have a bullish trend for growth since median hoe price have slowed down,

From Doug Short:


Just like for  existing homes,  the monthly supply of new homes is  higher now than any period from 1999-2005 – so inventory is not slowing growth.

Growth is being held back because housing is expensive, demographics are light, and no more exotic loans being offered to unqualified buyers.

From Calculated Risk:


In general, we can say that 2016 has a very positive sales trend even with the revisions for the past 2 months. The trend  is much better than 2013, 2014 and 2015 when total sales disappointed everyone. We have more realistic expectation now for new home sales and this is refreshing to see.

In December of 2015, I predicted the following

“For 2016, I am predicting growth of 4%-8%, the lowest growth estimates I have given in this cycle. However, just like 2015, if we can get more lower priced homes in the market, new home sales growth can be much higher than 8.”

This is largely what we have seen. The median home price has fallen,  we should end up with above 8% growth for the year.

From Calculated Risk:


From Doug Short


On a personal note, I will be speaking in 2 panels next week at the 2016/ Americatalyst conference in Austin, Texas

Panel 1    1.3 BREAKING BAD: Scoring the Housing Finance Market


Teresa Bazemore

Radian Guaranty

Sean Dobson

Chief Executive Officer | Chairman
Amherst Holdings

Mark Fleming

SVP | Chief Economist
First American Financial Corporation

Logan Mohtashami

Senior Loan Manager
AMC Lending Group

Ted Tozer


GNMA | Ginnie Mae

Panel 2 :   2.4 DEJA VU: House and Rent Price Projections


Douglas Bendt

SVP of Product Development & Research

Mark Fleming

SVP | Chief Economist
First American Financial Corporation

Logan Mohtashami

Senior Loan Manager
AMC Lending Group

Allan Weiss

Founder & CEO
Weiss Residential Research

Logan Mohtashami is a senior loan officer at AMC Lending Group,  which has been providing mortgage services for California residents since 1987. Logan also tracks all economic data  daily on his own facebook page

2 thoughts

  1. Logan, I enjoy following your blog, but I’ve always had trouble understanding your take on housing prices. If, as you say, demographics are light and inventory is not low, then how are prices so high? Is it just low interest rates?

    1. This is something I am going to address at my conference next week with housing economist on prices

      1. Prices are a function of inventory

      Post 1996-2016 the only time we had 6 months inventory was 2006-2011

      Great Housing Bubble pushed inventory into 6 months in Feb of 2006.

      Recession and bubble burst drove the rest of the years

      But … if you take out 2006-2011

      We have never had 6 months supply in America post 1996

      Which gives the cycle legs for prices to move higher because a lack of affordability keeps inventory below 6 months.

      20 year history on this

      Here is a data chart for it

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