New Home Sales Crush Forecasts in Surge to 14-Year High

Mish

New home sales rose for the 6th month to a seasonally-adjusted annualized rate (SAAR) of 1,011,000 homes.

Econoday Consensus

The Econoday consensus was 875,000 units in a range of 820,000 to 950,000 unit.

The Census Bureau's New Residential Sales report provides a regional breakdown. 

Sales by Region SAAR

  • Northeast: 42,000
  • Midwest: 99,000
  • South: 636,000
  • West: 242,000

New Home Sales 1963-Present

Newe Home Sales SA Since 1963 2020-08

Seasonal Adjustments Distortions

It's important to understand seasonal adjustment distortions. New home sales for the month were 83,000 units, the same as last month. 

Sales in the normally busy months of April and May instead happened in July and August making for mammoth adjustments.

The impact especially shows up year over year where sales were up an amazing 43.2 percent from last August.

Actual Number of New Homes Sold in August

  • Northeast: 4,000
  • Midwest: 9,000
  • South: 52,000
  • West: 19,000
  • Total: 83,000

83,000 in actual sales is reported as 1,011,000 new homes sold.

Year-to-Date Comparisons

New Home Sales YTD 2020-08

Year-to-date actual sales were at this level in the mid 1980s and were higher in the late 1970s. 

Sales were also higher between 1996 and 2006. Population-adjusted, these sales don't really stack up. 

New home sales are having a very good year. However, the above chart puts a badly needed perspective on things.

Existing Home Sales at Highest Level in 14 Years

Also note Existing Home Sales at Highest Level in 14 Years. But once agaain, seasonal distortions annualized are in play.

Mish

Comments (12)
No. 1-7
Eddie_T
Eddie_T

I just looked at the Texas data....... and Dallas and Houston are leading in new home sales.....they both turned up last December and have been headed higher ever since....not even a COVID dip in April.

Pretty wild.

Joe Rogan moved to Austin......I think he lives just across the freeway from me...but that's a rumor...unsubstantiated as of yet.

PecuniaNonOlet
PecuniaNonOlet

39 days till election. I read somewhere that mortgage rates were likely going to be 1.5% at some point so why not buy now and refinance next year. Hell if we get to negative rates, the bank will pay you to own the house!

21 days till Boris Brexit Bonanza.

AWC
AWC

Pent up demand.

Sechel
Sechel

Low interest rates and people cooped up deciding a bigger home made sense

SoCaliforniaStan
SoCaliforniaStan

The K shaped "recovery" continues.

mkestrel
mkestrel

Its called inflation

Pater_Tenebrarum
Pater_Tenebrarum

I don't get it - why not just count them? What is the purpose of "seasonally adjusting" sales?


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