First and foremost, that was an excellent new homes report this morning, don’t let anyone tell you otherwise. As long as the context stays within the storyline of a slow but steady new home sales cycle, you should be okay with saying this report was excellent.
In 2018 I wrote:
“I expect to see a negative 3% to 1% growth in new home sales in 2019. The builders could discount to add some more business. I expect they will instead hope that lower mortgage rates will get them back on track for slow and steady growth instead of decreasing their margins.”
Not only did lower rates do their thing, but we also have a massive beat this year in the new home sales market. Sales are up 9.8% year to date. In fact, sales are up so much this year that it is a prime factor why I am going to reduce my forecast a tad when my 2020 prediction articles come out in the next few days.
The most crucial data line set today was that the new home revisions held up 4 straight months of over 700,000 sales, and 5 out of the last 6 reports have been over 700,000. I can’t stress how important it is to hold up these higher sales data line prints. This is something we have not to be able to do in the past.
3-month sales average running at 719,666
3-month monthly supply average running at 5.4 months
Yes, it is still true that single-family starts are a negative year to date but barely now. Total housing starts just past into the positive. The excess supply created last year when the 10-year yield got as high as 3.25% has been brought down to a more sustainable level for slow and steady growth.
New Home Sales
Sales of new single‐family houses in November 2019 were at a seasonally adjusted annual rate of 719,000, according to estimates released jointly today by the U.S. Census Bureau and the Department of Housing and Urban Development. This is 1.3 percent (±11.0 percent)* above the revised October rate of 710,000 and is 16.9 percent
(±19.4 percent)* above the November 2018 estimate of 615,000.
The median sales price of new houses sold in November 2019 was $330,800. The average sales price was $388,200.
For Sale Inventory and Months’ Supply
The seasonally‐adjusted estimate of new houses for sale at the end of November was 323,000. This represents a supply of 5.4 months at the current sales rate.
My best advice on this sector of the economy is not to over hype the new home sales data. We have taken a recessionary data line off the recession watch grid this year from this sector. This part of the economy is looking better now so that in itself is a victory for this expansion.
With the parameters I set for 2019, the A-ok was given in May of 2019 to get the housing market out of the penalty box. This one was for the recession bears.
Best New Home Sales Report Of The Cycle: May 23, 2019
Now we have to get back to the typical issues of why this housing cycle has been the weakest demand cycle in new homes and housing starts ever. However, for this year, 9.8% year to date sales are the most prominent housing beat of this economic expansion and should be duly noted.
From Doug Short:
Note: I will be on Bloomberg Financial Friday morning to go over the 2020 Housing Outlook.
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 facebook page https://www.facebook.com/Logan.Mohtashami and is a contributor for HousingWire.