December 2017 Headline New Home Sales Decline

Written by John Lounsbury and Steven Hansen

The headlines say new home sales declined and was well below market expectations. Our analysis also shows deceleration of new home sales.

Analyst Opinion of New Home Sales

This month the backward revisions were again downward which affected the growth rate this month. Because of weather and other factors, the rolling averages are the way to view this series – and the rolling averages are around average for the levels seen since the beginning of 2016..

This month was much worse than last month.

This data series is suffering from methodology issues which manifest as significant backward revision. Home sales move in spurts and jumps – so this is why we view this series using a three month rolling average.

Econintersect analysis:

unadjusted sales growth decelerated 12.2 % month-over-month.

unadjusted year-over-year sales down 10.3 % year-over-year. Year-over-year growth rate this month was above the range of growth seen last 12 months.

three month unadjusted trend rate of growth decelerated 1.1 % month-over-month – is up 11.2 % year-over-year.

US Census Headlines:

seasonally adjusted sales down 9.3 % month-over-month

seasonally adjusted year-over-year sales up 14.1 %

market expected (from Bloomberg) seasonally adjusted annualized sales of 635 K to 710 K (consensus 683 K) versus the actual at 625 K.

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

Seasonally Adjusted New Homes for Sale

The headlines of the data release:

Sales of new single-family houses in December 2017 were at a seasonally adjusted annual rate of 625,000, according to estimates released jointly today by the U.S. Census Bureau and the Department of Housing and Urban Development. This is 9.3 percent (±11.0 percent)* below the revised November rate of 689,000, but is 14.1 percent (±13.0 percent) above the December 2016 estimate of 548,000. An estimated 608,000 new homes were sold in 2017. This is 8.3 percent (±4.1 percent) above the 2016 figure of 561,000.