New Home Sales Rise Following Huge Two-Month Downward Revisions
The census bureau reports new home sales rose 3.5%.
There's only one problem: revisions.
At 629,000, August's annualized sales pace for new homes came in right at expectations but is offset by sharp downward revisions to the two prior months totaling 39,000 (July now 608,000 vs an initial 627,000; June now 618,000 vs 638,000).
And the gain in August was boosted by discounting as the median fell 2.4 percent to $320,200. Discounting is also evident in the year-on-year rate, at plus 1.9 percent vs a 12.7 percent rise in sales.
Supply moved into the market, up 1.6 percent to 318,000 new homes for sale, but remains little changed relative to sales, at 6.1 months vs 6.2 months.
By region, the West is doing best with a 9.1 percent monthly gain and a 19.1 percent yearly gain. The Midwest is next at plus 2.7 percent for a yearly 13.2 percent followed by the South which is by far the largest region, down 1.7 percent in the month but up 11.5 percent year-on-year. The Northeast is by far the smallest region and though sales soared a monthly 48 percent, the gain is exaggerated given the low base. Northeast sales on the year are down 2.9 percent.
This report is mixed with the downward revisions a reminder of how volatile housing data can be. But volatility aside, the sector is doing no better than mixed and looks to remain a disappointing contributor to overall economic growth.
Mixed Report Not
This report is not mixed. This image shows why.
Some of that bust and rebound is related to the 2017 hurricane season. And we may be in for a repeat, but I expect on a smaller scale.
Strip out the hurricanes impacts and at best housing has flat-lined. I suspect worse, but it is difficult quantify.
Meanwhile the Fed is hiking and with that, the maximum loan people can afford is declining.
This is not a mixed bag.
Mike "Mish" Shedlock