New Homes Sales ‘Normalized’ Rather Than Dropped

New home sales dropped last month, but I think “normalized” would be a better description.

Dr. Bill Conerly based on Census Bureau data

New home sales

On the accompanying chart, I show the data (seasonally adjusted, annual rates) as reported by the Census Bureau, along with my own calculation of the 12-month average before last year’s hurricanes; the 3-month average in the wake of the hurricanes, and the most recent data point. The 3-month high sales period translates into roughly 15,000 more homes sold than if the old average had held.

Hurricane Harvey destroyed 12,700 homes, with damage to over 200,000. Irma destroyed 675 in the Florida Keys. Damage that is not totally destructive may trigger additional new home sales. A family whose house will take six months to repair may well buy another home, selling the old house when it becomes marketable.

In broad terms, then, the recent spike doesn’t mean that underlying drivers of housing demand were stronger last year, nor that those underlying drivers changes last month.