Wild Swings in New Home Sales: Median Price Declines, Average Price Up
Sales came in just a bit below the top Econoday estimate.
New home sales shot 6.1 percent higher in February to a 592,000 annualized rate that easily beats the Econoday consensus for 565,000 and is near the top estimate of 600,000. Sales appeared to have gotten a boost from builder concessions as the median price fell a monthly 3.9 percent to $296,200 for a year-on-year rate that’s suddenly in the negative column at minus 4.9 percent.
Strength is centered in the Midwest where the sales rate surged 21,000 to 89,000 and easily surpassing 11,000 gains for the both the West, at 157,000, and the South at 313,000. Sales in the Northeast fell sharply in yesterday’s existing home sales report and are down 9,000 to a very low 33,000 annualized rate in today’s report.
Supply of new homes did rise slightly in the month, up 4,000 to 266,000 currently on the market, but relative to sales supply fell to 5.4 months from 5.6 months. Supply has been thin all cycle for new homes and was at 5.5 months in February last year.
Most of the news is good in this report underscored by the average price which, reflecting high-end properties, jumped 9.9 percent in the month for a yearly 11.7 percent gain at $390,400 and a new record. Today’s report helps offset weakness in existing home sales and keeps the housing sector on a moderately climbing slope.
New Home Sales Jump Second Month
Mortgage News Daily reports New Home Sales Build on January Strength.
New home sales posted a much better February than did existing home sales and, in fact, better than most analysts had expected.
It was the second consecutive month of strength for the indicator which had see-sawed between positive and negative results in the waning months of 2016.
On a non-seasonally adjusted basis, there were 49,000 new homes sold in February compared to 41,000 in January. Thirty-six-thousand of the homes sold were in the $200,000 to 299,000 price tier.
The median price of a new home sold in February was 296,200 compared to $311,300 a year earlier. The average price was $390,400 compared to $349,400.
There were strong geographic differences in the rate of sales. In the Northeast, sales were down 21.4 percent for the month while remaining 13.8 percent higher than the previous February. In contrast, the Midwest posted a 30.9 percent month-over-month improvement and the annual change was 50.8 percent.
Sales in the South rose 3.6 percent from January and 7.9 percent from February 2016 and sales in the West were up 7.5 percent and 6.8 percent from the two earlier periods.
At the end of February, there were an estimated 261,000 homes available for sale on a non-seasonally adjusted basis. This is an estimated 5.4-month supply at the current rate of sale. Sixty-three-thousand of the available homes are completed, construction had not started on 51,000.
Median vs Average Sale
It’s interesting to see the median price dropping with the average price soaring. It’s a tale of two economies and who is and isn’t gaining.
That said, these swings are so wild, I smell revisions.
For now, this should boost GDP estimates.
Treasury Yields Don’t Match
This seems like a strong report but look at treasury yields. They barely moved.
The yield on the two-year treasury note is flat. The yield on five- and thirty-year treasuries moved only one basis point.
Mike “Mish” Shedlock