October 2017 Headline New Home Sales Improve

Written by John Lounsbury and Steven Hansen

The headlines say new home sales improved and was well above market expectations. Our analysis also shows acceleration of new home sales.

Analyst Opinion of New Home Sales

This month the backward revisions were mixed, but the rolling averages significantly improved. Because of weather and other factors, the rolling averages are the way to view this series – and the rolling averages are about average for the levels seen since the beginning of 2016.

This month was better than last month.

This data series is suffering from methodology issues which manifest as significant backward revision. Home sales move in spurts and jumps – so this is why we view this series using a three month rolling average.

Econintersect analysis:

unadjusted sales growth accelerated 28.8 % month-over-month.

unadjusted year-over-year sales up 37.5 % year-over-year. Year-over-year growth rate this month was above the range of growth seen last 12 months.

three month unadjusted trend rate of growth accelerated 10.2 % month-over-month – is up 15.4 % year-over-year.

US Census Headlines:

seasonally adjusted sales up 6.2 % month-over-month

seasonally adjusted year-over-year sales up 18.7 %

market expected (from Bloomberg) seasonally adjusted annualized sales of 600 K to 650 K (consensus 620 K) versus the actual at 685 K.

The quantity of new single family homes for sale remains well below historical levels.

Seasonally Adjusted New Homes for Sale

The headlines of the data release:

Sales of new single-family houses in October 2017 were at a seasonally adjusted annual rate of 685,000, according to estimates released jointly today by the U.S. Census Bureau and the Department of Housing and Urban Development. This is 6.2 percent (±18.0 percent)* above the revised September rate of 645,000 and is 18.7 percent (±23.5 percent)* above the October 2016 estimate of 577,000.