For 2020 I wrote this:
“For the new home sales market, I expect a 2.3% – 4.7% growth next year. Everyone needs to be mindful of rising yields in this sector”
Back on May 23rd, 2019, I wrote an article stating this was the best new home sales report. Most of the discussion was really that I was able to remove this sector from the penalty box, which means that we are back to the trend of slow and steady growth for new home sales and starts. From that point, permits started to take off because the monthly supply of new homes came back down to an acceptable level for growth.
The Best New Home Sales Report Of The Cycle
Today both monthly supply for new homes and housing permits look good to go for growth in starts.
Remember always, don’t overhype housing data, keep it in the context of slow and steady.
3-month sales average is 721,333
3 month monthly supply average of 5.36 months
Sales are up 18% year over year (Mindful of the low comps); this won’t be with us later on in the year.
This is good enough to keep housing starts to grow, which we will need with this Coronavirus situation here until that dreadful event is contained.
More on that subject here :
Coronavirus And The 6th Recession Red Flag
Now to the report from Census.
New Home Sales
Sales of new single‐family houses in January 2020 were at a seasonally adjusted annual rate of 764,000, according to estimates released jointly today by the U.S. Census Bureau and the Department of Housing and Urban Development.
This is 7.9 percent (±17.8 percent)* above the revised December rate of 708,000 and is 18.6 percent (±19.2 percent)* above the January 2019 estimate of 644,000.
The median sales price of new houses sold in January 2020 was $348,200. The average sales price was $402,300.
For Sale Inventory and Months’ Supply
The seasonally‐adjusted estimate of new houses for sale at the end of January was 324,000. This represents a supply of 5.1 months at the current sales rate.
As long as the Coronavirus is with us and the negative economic impact it will have with the upcoming reports, bond yields should stay low. Housing gets in trouble when the 10-year yield gets above 2.62%. For now, we don’t worry about this sector because we haven’t had any city shutdowns of American cities. The most important thing right now is containing this virus and saving as many lives as we can around the world.
Regarding housing, slow and steady will win this race and note that purchase application data has had 5 straight weeks of double-digit growth, something that hasn’t happened since 2016 during the heat months.
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.