New Home Sales Badly Miss Expectations


New home sales rose 1.3% in November but only because of huge downward revisions.

Revision Mirage

The Census Bureau's New Residential Sales Report shows sales rose 1.3% in November to a Seasonally-Adjusted-Annualized-Rate (SAAR) of 719,000 units but it's a revision mirage.

Last month the report showed 733,000 sales but the Census Department revised October down to 710,000 units.

The Econoday consensus was a slight gain to 735,000 units so this was a bad two-month miss.

Nonetheless, figures over 700,000 are at the top end of the sales range since 2007.

Long Term Trends

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Bulls will point out huge year-over-year advances. But that is against dismal October and November sales of 557,000 units and 615,000 units respectively.

Another easy year-over-year-comparison is coming up. December 2018 had 546,000 sales.

The long-term picture though still shows a depressed setup, especially in light of population growth.

New Home Sales by Region - Seasonally Adjusted

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The Northeast had a whopping 52.5% increase in sales on a seasonally-adjusted basis. But a closer look at the numbers show it's meaningless.

New Home Sales by Region - Unadjusted

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On an unadjusted basis, people bought 55K homes in July, 57K home in August, 56K in September, 55K in October, and 52K in November.

November's 52,000 sales gets reported as 719,000.

That puts seasonal adjustments and annualized rates in proper perspective.

Mike "Mish" Shedlock

Comments (6)
No. 1-6
Tony Bennett
Tony Bennett

"New Home Sales Badly Miss Expectations"


Never surprised when "experts" fail to have functioning brain cells.

I noted MONTHS ago year end housing numbers would disappoint due to August yield plunge (much of which since wiped away).

September revised 738K ---> 730K for good measure ... not that Mr Market cares a wit.


Look at that chart, we are just now getting back to the new home sales that were last seen in the mid nineties, back when Clinton was president. No wonder rental prices are skyrocketing.


Decent print for November, but it was an incredibly easy year-over-year comparison. The challenge going forward is that the Fed pulled demand forward by their incredible (and totally predictable) U-turn on policy normalization. Here in the most active new home market in the country things were ripping along pretty good in November, but that's only because rates were 117 basis points lower and builders were still keeping a lid on prices. Affordability is key, and once again the Fed showed us they don't give a damn about affordability when it comes to housing. This is going to pose some challenges next year. Without more stimulus (lower rates and/or lower prices), easy to see a situation where home sales slip back into decline as the declining marginal productivity of debt eats into demand for expensive homes.


The decline in new home sales in the northeast and the small portion it makes nationally clearly shows those states and municipalities won't be able to grow their way out of debt.


my feeble interpretation of the FRED new homes chart is that prior to the 1990 housing bubble run the mean sales were about 600,000. The mean of the entire chart is about 750,000 considering the ugly bubble. I might choose to exclude this period due to the its deviation to the historical mean. If one believes in mean revision and the true market mean is 600,000 your going to see another inversion at or below 850,000. The future does not look too bright to me.


"The Northeast had a whopping 52.5% increase in sales on a seasonally-adjusted basis."

The midwest, where I recently bought a home, shows a 1.4% DECREASE on a seasonally-adjusted basis. At least I'm not in a bubble area. But I'm still prepared for an eventual decline.

I'm not sure how the adjustments are made but people do tend to buy in the Spring and move in the Summer so some adjustments do seem reasonable.

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