January 2019 New Homes Sales
Submitted by Atlas Indicators Investment Advisors on March 29th, 2019
New home sales fell to start 2019 according to the latest data from the Census Bureau. Before you wonder about the timeliness of the release, you are correct; it was delayed by the partial government shutdown. Not even the extra time allowed enough homes to be counted for a positive rate of change. On a seasonally adjusted annualized basis, 607,000 new home were sold in January, falling from the upwardly revised count of 652,000 (originally 621,000) in December.
Three of the four regions were weaker in the period as well as on a year-over-year basis. Sales in the Northeast plummeted 11.4 percent and have declined by the same amount versus 12 months earlier. Midwest transactions were off 28.6 percent to start the year and declined 41.9 percent compared to the start of 2018. Sales in the South, the largest segment of the country, experienced a drop of 15.1 percent but are up 6.2 percent from a year ago. Finally, transactions in the West jumped 27.8 percent, however declined 3.2 percent in the prior year.
Inventory data were mixed. The number of homes for sale declined 5,000 as new building did not keep up with the purchase volume in January. At the current pace of transactions, this 311,000 unit supply represents 6.6 months of sales, up from 6.3 percent in December.
Price proxies dipped in the period. An average home’s price fell $900 to $373,100. Meanwhile, the median priced home sold for $317,200, down $1,900 since December.
New home sales are a bit weak here but not to a point of creating concern at Atlas. As you can see in the chart above, the year-over-year trend has dropped below zero several times since the last recession. We’ll keep an eye on this indicator to see is something more concerning is building, but we cannot draw that conclusion yet.