October 2018 New Home Sales
Submitted by Atlas Indicators Investment Advisors on December 4th, 2018
Sales of new homes continued falling in October 2018 according to the Census Bureau. Sales of new single-family houses dropped 53,000 to 544,000 on a seasonally adjusted annualized basis. This is 8.9 percent less than in September and 12.0 percent below the October 2017 figure of 618,000.
Sales fell in all for regions. Transactions in the West were off 3.2 percent for the month but just 1.3 percent from a year ago. Likewise, Southern sales slacked, dropping 7.7 percent and 11.6 percent during the month and year respectively. Northeast deals declined 18.5 percent in October and are off a whopping 46.3 percent versus a year earlier. Finally, Midwest contracts collapsed 22.1 percent in the period but were only down 16.7 percent from a year early.
Like a month earlier, price proxies were mixed. The median priced home dropped to $309,700 from $321,300 and is now below its year-ago level; it is even nearing the 2016 median of $307,800. However, the average price of a home rose $16,000 to $395,000 which is the best reading since December 2017. This discrepancy in price estimates suggests home sales were more robust in the higher priced areas of the country.
Builders were busy in the period. The number of homes for sale increased 14,000 units on a seasonally adjusted basis to 336,000. At the current pace of sales, it will take 7.4 months to deplete the inventory.
Those buying homes were anxious to do so. Units sold quickly as the average number of months a house was on the market after its completion dropped to 2.7 months; this is the shortest for-sale period in the history of this data point, and it goes back all the way to 1975.
Housing is still rather sluggish notwithstanding the quick sales. Transaction volume is not looking strong and prices are mixed. New homes represent roughly 4 percent of gross domestic product according to the National Association of Home Builders. Atlas is paying closer attention to this portion of the economy lately since it is a relatively big component and is behaving lethargically. Further deterioration will make it even tougher for our nation’s output to accelerate.
