Today the Census Bureau reported on new home sales of 569,000, showing a huge miss from estimates.
Even with this big miss, the housing market is just fine. Revisions for the previous month’s numbers were positive, with supply up to 5.7 months and median sales prices cooling off. This is good because if we want more sales, we need more smaller homes at more modest prices in the mix.
New Home Sales
Sales of new single-family houses in April 2017 were at a seasonally adjusted annual rate of 569,000, according to estimates released jointly today by the U.S. Census Bureau and the Department of Housing and Urban Development. This is 11.4 percent (±10.5 percent) below the revised March rate of 642,000, but is 0.5 percent (±11.3 percent)* above the April 2016 estimate of 566,000.
The median sales price of new houses sold in April 2017 was $309,200. The average sales price was $368,300.
For Sale Inventory and Months’ Supply
The seasonally-adjusted estimate of new houses for sale at the end of April was 268,000. This represents a supply of 5.7 months at the current sales rate.
I previously predicted growth between 4 and 7% for 2017 and we are on pace to achieve these numbers.
“For 2017, I predict 4%-7% growth, if the positive trend of builders offering smaller homes continue then we can have much more growth in sales in 2017.”
The median home sales price has gone nowhere for years. Builders are trying to bring smaller homes on to the market which will help to increase the unit sales. Adding smaller, more affordable homes into the sales mix will help to move along the slow and steady growth in new homes sales, which are working from a very low base in this economic cycle.
Keep in mind however, that new home sales data is subject to big swings up or down so keeping an eye on revision trends is key to predicting the market.
There is a tendency for enthusiastic hyperbole in housing market reports that over hype demand. This presentation of alternate facts includes such verbal gems as Jim Cramer stating this morning before the report that this is the best time for home builders ever in history. But before we start shaking our pom poms for the housing market, remember that as of today we have only surpassed the tail end of one recession in terms of unit sales once you adjust it to population. Even with 166,000,000 plus Americans working, even with mortgage rates below 5% since early 2011, even with over 5,700,000 job openings and a long historic economic expansion, this is all we can manage.
The theme of slow and steady growth for housing continues! Unit sales for housing are still very low in historical terms. But we have a better housing demographic ahead of us.
Revisions for the previous months were positive, and the trend is growth is positive but the unit sales are still very low. Ignore both the super bullish and super bearish report on housing. Slow and steady is how this market rolls. If anyone says housing as record breaking demand…. just give a eye roll.
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