February 2018 Headline New Home Sales Continue To Slow

Written by John Lounsbury and Steven Hansen

The headlines say new home sales declined. Our analysis also shows even more deceleration of new home sales. Sales prices were similar to last month.

Analyst Opinion of New Home Sales

This month the backward revisions were upward. Because of weather and other factors, the rolling averages are the way to view this series – and the rolling averages remain average for the levels seen since the beginning of 2016..

This month was slightly better than last month. Note that inventory levels are now around 6 months.

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 4.4 % month-over-month.

unadjusted year-over-year sales 0.0 % year-over-year. Year-over-year growth rate this month was in the average range of growth seen last 12 months.

three month unadjusted trend rate of growth decelerated 8.7 % month-over-month – is up 6.7 % year-over-year.

US Census Headlines:

seasonally adjusted sales down 0.6 % month-over-month

seasonally adjusted year-over-year sales up 0.5 %

market expected (from Bloomberg) seasonally adjusted annualized sales of 600 K to 660 K (consensus 618 K) versus the actual at 618 K. [there was no expectations this month]

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 February 2018 were at a seasonally adjusted annual rate of 618,000, according to estimates released jointly today by the U.S. Census Bureau and the Department of Housing and Urban Development. This is 0.6 percent (±13.3 percent)* below the revised January rate of 622,000, but is 0.5 percent (±16.6 percent)* above the February 2017 estimate of 615,000.