October 2017 New Home Sales
Submitted by Atlas Indicators Investment Advisors on December 4th, 2017
New home sales in America have been strong during the past couple of months according to data from the Census Bureau. After surging 14.2 percent in September, this volatile indicator continued its upward trend in October 2017 by adding another 6.2 percent. With contract signings reaching 685,000 on an annualized basis, this latest swell puts the indicator at its best level in the current cycle.
While transaction commitments rose, prices proxies were mixed. Some builders seem to have discounted prices to persuade buyers to sign on the dotted lines. The median-priced home declined 3.7 percent in the period, falling to $312,800 for a year-over-year uptick of just 3.3 percent. However, the average home price increased 5.0 percent to $400,200 and is up 13.6 percent versus a year earlier, suggesting more expensive home markets are improving faster.
Inventory measures were mixed as well. The supply of home for sale rose 4,000 to 282,000 units or 1.4 percent. However, since transaction volumes grew faster than the number of new homes on the market, the relative to sales inventory figure dropped to just 4.9 months (the lowest level since June 2016) from 5.2 months in September.
All regions are participating in the improving new housing market, but the dispersion of growth is wide. Transaction volumes in the Northeast have soared 64 percent versus a year earlier, and the West has enjoyed an uptick of 20.1 percent. The other two regions have been relatively slower as the Midwest gained 16.4 percent, and the South is up 14.0 percent.
Volatility remains a characteristic of this indicator, but the past two iterations’ volatility has been to the upside of the average which bodes well for the overall economy. Many industries are needed leading up to the sale of a newly built home: state and local governments, construction firms, finance and insurance companies, realtors, and others must participate in the completion of a new abode. This release of new home sales supports the notion that America’s economy continues improving.
