January 2016 New Home Sales Contract. Weather?

Written by John Lounsbury and Steven Hansen

The headlines say new home sales significantly declined from last month – and is in contraction year-over-year. The rolling averages smooth out much of the uneven data produced in this series – and this month there was a decline in the rolling averages. Likely it was the weather BUT new home sales have been on a declining trendline.

As the data is noisy, the 3 month rolling average is the way to look at this data. This data series is suffering from methodology issues. Econintersect analysis:

unadjusted sales growth decelerated 13.7 % month-over-month (after last month’s deceleration of 1,1 %).

unadjusted year-over-year sales down 5.1 % (Last month was up 8.6 %). Growth this month was well below average for the range of growth seen last 12 months.

three month unadjusted trend rate of growth decelerated 2.9 % month-over-month – is up 4.8 % year-over-year.

Unadjusted Year-over-Year Rate of Growth – Sales (blue line) and 3 month rolling average of Sales (red line)

US Census Headlines:

seasonally adjusted sales down 9.2 % month-over-month

seasonally adjusted year-over-year sales down 5.2 %

market expected (from Bloomberg) seasonally adjusted annualized sales of 505 K to 550 K (consensus 520 K) versus the actual at 494K.

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

Seasonally Adjusted New Homes for Sale

As the sales data is noisy (large monthly variations).

Year-over-Year Change – Unadjusted New Home Sales Volumes (blue line) with zero growth line emphasized

The headlines of the data release:

Sales of new single-family houses in January 2016 were at a seasonally adjusted annual rate of 494,000, according to estimates released jointly today by the U.S. Census Bureau and the Department of Housing and Urban Development. This is 9.2 percent (±13.5%)* below the revised December rate of 544,000 and is 5.2 percent (±12.6%)* below the January 2015 estimate of 521,000.