Today the Census Bureau reported that 563K new homes sold in October 2016. Sales for the previous month were revised downward to 574K.
“Sales of new single-family houses in October 2016 were at a seasonally adjusted annual rate of 563,000, according to estimates released jointly today by the U.S. Census Bureau and the Department of Housing and Urban Development. This is 1.9 percent below the revised September rate of 574,000, but is 17.8 percent above the October 2015 estimate of 478,000”
Sales of new single-family houses in October 2016 were 563K (SAAR) down 1.9% (+/- 13.1%)* from September 2016.
I predicted for 4%-8% growth in new home sales for 2016 and higher sales if the median home price fell or stayed flat. The report for October 2016 shows a rise in the median price from the lows of the year. But the median home price, in general has remained stable for the last twelve months. This can be viewed as a bullish factor for new home sales going forward because it means more smaller size homes are part of the sales mix.
But new homes are still expensive, compared to existing inventory and that is one of the factors that is preventing stronger demand in this sector. And this will just get worse with higher mortgage rates.
Keep your eye on new homes sales if mortgage rates hit 4.5%. In 2014, a rise in interest rates to 4.5% was followed by the biggest miss in new home sales estimates that I have ever seen in my 20 years in finance. And, that was working from a low 400K level in sales. The cycle is older now, demographics are getting better and we are still working from historical low levels in new home sales.
Still, 2016 was a growth year for new home sales.
From Calculated Risk:
Logan Mohtashami is a financial writer and blogger covering the U.S. economy with a specialization in the housing market. 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 https://www.facebook.com/Logan.Mohtashami