A few Comments on February New Home Sales

by Bill McBride on three/23/2017 12:51:00 PM

New residence product sales for February had been reported at 592,000 on a seasonally adjusted annual payment basis (SAAR). This was properly above the consensus forecast, however the three earlier months blended had been revised down barely. Complete this was a steady report.
Discover: February 2017 was hotter than common in numerous the nation, and since new residence product sales are counted when the contract is signed, the great local weather might have had a optimistic impression on product sales in February.
Product sales had been up 12.eight% year-over-year in February. Nonetheless, January and February had been the weakest months ultimate 12 months on a seasonally adjusted annual payment basis – so this was an easy comparability.
It ought to take plenty of months of data to see the impression of higher mortgage prices – and that’s the seasonally weak interval – so we must attend for the March and April data to see if there was any impression.
Earlier: New Home Sales increase to 592,000 Annual Rate in February.
New Home Sales 2015 2016Click on on on graph for greater image.
This graph reveals new residence product sales for 2016 and 2017 by month (Seasonally Adjusted Annual Worth). Product sales had been up 12.eight% year-over-year in January.
For the first two months of 2017, new residence product sales are up 7.1% compared with the an identical interval in 2016.
And proper right here is one different exchange to the "distressing gap" graph that I first started posting varied years up to now to point the rising gap introduced on by distressed product sales. Now I'm looking for the outlet to close over the next plenty of years.
Distressing GapThe "distressing gap" graph reveals current residence product sales (left axis) and new residence product sales (correct axis) by the use of February 2017. This graph begins in 1994, nevertheless the connection had been fairly common once more to the '60s.
Following the housing bubble and bust, the "distressing gap" appeared largely on account of distressed product sales. The outlet has endured although distressed product sales are down significantly, since new residence builders focused on costlier homes.
I anticipate current residence product sales to maneuver additional sideways, and I anticipate this gap to slowly shut, largely from an increase in new residence product sales.
Nonetheless, this assumes that the builders will present some smaller, cheaper homes. If not, then the outlet will persist.
Discover: Present residence product sales are counted when transactions are closed, and new residence product sales are counted when contracts are signed. So the timing of product sales is totally totally different.