New Home Sales Jump After Steep Negative Revisions

Mish

New home sales in May jumped 16.6% to 676,000 units on a seasonally adjusted annualized basis.

The huge percentage jump is from a downward revision. The Census Bureau revised April from 623,000 units to 580,000 units.

Sales vs Expectations

Mortgage News Daily commented "For the second month in a row, sales of newly constructed homes outdistanced expectations." 

Factoring in the revision, sales beat expectations one month in a row but by a huge margin. 

The Econoday consensus was 636,000 units in a range of 600,000 to 670,000.

Sales by Region

  • Northeast: 32,000 up from 22,000 -6.4%
  • Midwest: 73,000 down from 78,000 +45.5%
  • South: 402,000 up from 349,000 +15.2%
  • West 169,000 up from 139,000 +29.0%

New Home Sales 1963-Present

New Home Sales 2020 May

New home sales are back to a level below that in July 1963. 

Perhaps the best way to look at things is to average things for the year. Jan 774K, Feb 716K, Mar 612K, Apr 580K, May 676K. 

The average for 2020 is 670K, right about where we are now. New homes were thus one of the least Covid-impacted areas. 

From the February 2011 low of 270,000 units it's been a very slow recovery historically speaking.

There is no reason to expect an acceleration now.

Mish

Comments (9)
No. 1-5
autrader1
autrader1

Great news since new homes has a major impact on the economy.

If you believe remote work is here to stay, the trend will accelerate. Plus the largest cohort in history will become first time buyers

Long homebuilders and home suppliers for 5-10 years.

Tony Bennett
Tony Bennett

January + February were boosted by warm weather and little snow.

Tony Bennett
Tony Bennett

Of course, the OBVIOUS solution is to reduce lending standards to kick the can a bit further.

Consumer Financial Protection Bureau (CFPB) to the rescue.

Do away with DTI (debt to income) limit of 43% on qualified mortgages. "Win win" as borrowers will be allowed to get neck deep (deeper?) in debt AND taxpayers will be on the hook for a ginormous bailout of GSEs when (not if) it all blows up.

MiTurn
MiTurn

Lawrence Yun is right! See, it's a great time to buy a house!

Just kidding...


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