In 2017 I wrote:
” I expect to see 2%-5% growth in new home sales that could go higher if the median sales price remains stable and the trend of building smaller homes continues. ”
Growth in new home sales and all other housing metrics are matching my predictions for the year. Housing story for 2018 shouldn’t be viewed as bearish as it is being portrayed by some. We remain on trend to beat my new home sales estimate of 2%-5% growth, while the median sales price is cooling. Affordability remains a big deal in terms of facilitating stronger growth but slow and steady still looks good.
Before we get into today’s new home sales report, I would like to remind everyone that the monthly supply of inventory for new homes has been higher every month in this cycle, compared to the last cycle. The monthly supply is at 6.1 months according to today’s report.
Today, the Census Bureau reported that new home sales were roughly in line with estimates. Revisions were negative. The sales trend appears to be leading to 639,000 units for the year. With the trend in negative revisions, there is a chance that new homes sales growth will be 2%-5%, which was my prediction for the year. As of now new home sales still beating my estimate with year to date growth of 6.9%.
New Home Sales:
Sales of new single-family houses in August 2018 were at a seasonally adjusted annual rate of 629,000, according to estimates released jointly today by the U.S. Census Bureau and the Department of Housing and Urban Development. This is 3.5 percent (±13.7 percent)* above the revised July rate of 608,000 and is 12.7 percent (±20.7 percent)* above the August 2017 estimate of 558,000.
The median sales price of new houses sold in August 2018 was $320,200. The average sales price was $388,400.
For Sale Inventory and Months’ Supply:
The seasonally-adjusted estimate of new houses for sale at the end of August was 318,000. This represents a supply of 6.1 months at the current sales rate.
New home sales are continuing their slow and steady climb. Since sales are still historically low, this sector has legs to walk very slowly. This is a positive for the U.S. economy since we don’t have over-investment in this sector. Even if the growth in sales falls in upcoming reports, we should still be able to hit my 2%-5% growth predictions for the year.
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