February 2016 New Home Sales Improve?

Written by John Lounsbury and Steven Hansen

The headlines say new home sales improved from last month – and is in contraction year-over-year. The rolling averages smooth out much of the uneven data produced in this series – and this month there was a significant decline in the rolling averages.

This data series is suffering from methodology issues. Econintersect analysis:

unadjusted sales growth decelerated 0.3 % month-over-month (after last month’s deceleration of 13.7 %).

unadjusted year-over-year sales down 2.2 % (Last month was down 2.5 %). Growth this month was well below average for the range of growth seen last 12 months.

three month unadjusted trend rate of growth decelerated 5.8 % month-over-month – is up 0.8 % year-over-year.

Unadjusted Year-over-Year Rate of Growth – Sales (blue line) and 3 month rolling average of Sales (red line)

US Census Headlines:

seasonally adjusted sales up 2.0 % month-over-month

seasonally adjusted year-over-year sales down 6.1 %

market expected (from Bloomberg) seasonally adjusted annualized sales of 489 K to 530 K (consensus 510 K) versus the actual at 512 K.

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

Seasonally Adjusted New Homes for Sale

As the sales data is noisy (large monthly variations).

Year-over-Year Change – Unadjusted New Home Sales Volumes (blue line) with zero growth line emphasized

The headlines of the data release:

Sales of new single-family houses in February 2016 were at a seasonally adjusted annual rate of 512,000, according to estimates released jointly today by the U.S. Census Bureau and the Department of Housing and Urban Development. This is 2.0 percent (±18.8%)* above the revised January rate of 502,000, but is 6.1 percent (±17.9%)* below the February 2015 estimate of 545,000.

Unadjusted New Home Sales Monthly Volumes In Thousands