New Home Sales Plunge 35.9% in the West, 7.8% Overall, Prices Down 8.1%

Mish

There is little to like in today's residential sales report. New home sales dove 7.8% overall and prices also fell 8.1%.

Economists expected a rebound in housing this month so they are no doubt shocked by the Housing Residential Sales report.

New Home Sales

Sales of new single‐family houses in May 2019 were at a seasonally adjusted annual rate of 626,000, according to estimates released jointly today by the U.S. Census Bureau and the Department of Housing and Urban Development. This is 7.8 percent below the revised April rate of 679,000 and is 3.7 percent below the May 2018 estimate of 650,000.

Sales Price

The median sales price of new houses sold in May 2019 was $308,000. The average sales price was $377,200.

For Sale Inventory and Months’ Supply

The seasonally‐adjusted estimate of new houses for sale at the end of May was 333,000. This represents a supply of 6.4 months at the current sales rate.

Expectations

The Econoday consensus estimate was 680,000 units at a Seasonally-Adjusted-Annualized Rate (SAAR). 626,000 missed the mark by about 8%.

Econoday notes price data fell sharply, down 8.1 percent on the month to a median $308,000. Year-on-year, the median is down 2.7 percent and right in line with the 3.7 percent decline in sales.

Econoday's closing remark is worth noting: "For the Federal Reserve, the sudden downturn in May new home sales coincides with their concern over recent weakness in other parts of the economy, namely business investment, and adds further to the odds for a July rate cut."

New Homes by Region

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Volatility

This report shows intense regional volatility. There may be huge revisions in the West, or other regions lower.

Supply

Home builders sit on 333,000 new homes for sale. This represents builder speculation. But where is it?

333,000 is a national number. The report does not break down the supply by region. If the West has huge oversupply, those builders are in trouble.

Attitudes

New home sales are below where they were in 1965.

Affordability and attitude changes by milennials towards the "ownership society" and family formation are the key reasons sales have gone nowhere.

When the Fed bailed out the banks and mortgage holders, it did so at the expense of the ascendant generation who now cannot afford homes and luxuries their parent did.

For a discussion of attitudes and blame, please see Millennials, the Screwed Generation, Blame Boomers For Making Their Lives Worse.

Mike "Mish" Shedlock

Comments (24)
No. 1-14
KidHorn
KidHorn

Millennials should blame the gov't. Specifically liberal policies. Everyone should own a home and get a college education and the best way to accomplish this is to provide loans for everyone. Regardless of their ability to repay. Colleges could charge way more knowing people could pay by borrowing money from Sallie Mae. The same happened in housing because of Freddie Mac and Fannie Mae. Without these GSEs, education and housing costs would be far lower.

Blacklisted
Blacklisted

Since the Russian hoax was the biggest faux story over the last two year, one would think that it would be an even bigger story for a private company to try an rig an election. Yet, still nothing but crickets -

Ted R
Ted R

A deflationary collapse is finally here. I hedged for this a few years ago. Banks are looking like a good candidate for major shorting. I have no sympathy for the banks that made capital to accessible to poor credit risks or for those people who bought houses with little down payment. The hell with them all. Maybe this time around they will both learn to be more prudent.

shamrock
shamrock

New home sales for the first 5 months of 2019 are up 4% from 2018. One oddball month of data is really much ado about nothing.

Menaquinone
Menaquinone

Californians don't need to buy homes. They park their sex robot in the closet.

SMF
SMF

I can't understand how some people can damn an entire population and their future by this rampant debt, home prices, and student loans.

The future depends on having children, and at a certain point the human body just can't have children.

Millennials still want the same as other generations, they just can't afford it.

Six000mileyear
Six000mileyear

The regions with the worst declines are also the ones with the highest taxes; therefore, affected most by the limits of local and state taxes when itemizing the Federal tax retrun.

Runner Dan
Runner Dan

"When the Fed bailed out the banks and mortgage holders, it did so at the expense of the ascendant generation who now cannot afford homes and luxuries their parent did."

BINGO!!!

A major source of discontent in the western world that really is not discussed as such.

Mish
Mish

Editor

"It's hilarious that with the lowest interest rates, & lowest unemployment rate in history that millenials are crying that they can't 'afford it'. "

There is nothing hilarious about this. They genuinely cannot afford homes. On top of it, attitudes have changed. And yes, Obamacare screwed them further.

Sheeesh

Stuki
Stuki

"There is little to like in today's residential sales report. New home sales dove 7.8% overall and prices also fell 8.1%."

The only "little to like" about 8% cheaper housing, is that it wasn't 80%.

Jackula
Jackula

This is actually very frightening

DFWRealEstate
DFWRealEstate

"There may be huge revisions in the West, or other regions lower." I would not be surprised to see revisions higher. The pending new construction numbers from the largest new home market in the country certainly don't match up with this Census report. DFW saw a 27 percent YoY increase in pending new home sales activity, and closed sales of new construction were up 11 percent in May. Houston also saw 10% bump in pending overall sales. Reasonable assumption that new construction was a contributor to that jump. Here in Texas it's the resale market which is not keeping pace because sellers are not able to adapt to the shifting market and demand for more affordable homes.. https://aaronlayman.com/2019/06/new-home-sales-decline-3-7-percent-may-despite-lower-rates/

kilroy
kilroy

I don't see how the Fed bailout of the banks and mortgage holders affected the Millennials affording a house or luxuries?

kilroy
kilroy

Correction, I do see how they were affected, I just don't think it's as big a deal as others make it. I think it has more to do with their attitudes towards work and entitlements. Not saying all, but they are now the majority.


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