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New Home Sales Unexpectedly Plunge in June With Negative Revisions as Well

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10 comments on New Home Sales Unexpectedly Plunge in June With Negative Revisions as Well

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New Home Sales Seasonally-Adjusted Annualized Rate (SAAR)

The plunge in new home sales continues according to the Census Bureau’s New Residential Sales Report.

  • New Home Sales Sales of new single‐family houses in June 2021 were at a seasonally adjusted annual rate of 676,000.
  • This is 6.6 percent below the revised May rate of 724,000 and is 19.4 percent below the June 2020 estimate of 839,000. 
  • The median sales price of new houses sold in June 2021 was $361,800. The average sales price was $428,700. 
  • The seasonally‐adjusted estimate of new houses for sale at the end of June was 353,000. This represents a supply of 6.3 months at the current sales rate.

From a peak of 993,000 SAAR in January, sales have declined to a below trend 676,000 SAAR in June.

Badly Missed Estimates 

The Econoday consensus is amusing. 

  • May Sales as Originally Reported: 769,000
  • May Sales as Revised: 724,000
  • Consensus June Sales: 800,000 
  • Actual June Sales: 676,000

Massive Distortions of Reality

Seasonal adjustments distort the numbers badly. Covid distorted the numbers further.

To understand how much all one has to do is look at unadjusted numbers.

The bullet points for each of the charts is for the same month. 

For example, there were actually example 60,000 homes sold in June. This was reported as 676,000 homes sold.

NSA vs SAAR Bullet Points

  • June 2021: 60,000 NSA = 676,000 SAAR
  • January 2021: 77,000 NSA = 993,000 SAAR
  • April 2020: 52,000 NSA = 321,000 SAAR
  • January 2020: 59,000 NSA = 756,000 SAAR

So no, we did not sell nearly a million homes in January, it was 77,000 (and likely to be revised).

Covid of course massively distorted the numbers.

Buying got pushed into colder months and seasonal adjustments made a mess of reporting. 

All these numbers are heavily revised every month. This month I noticed a revision all the way back to January of 2018, over 3 years ago. 

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10 Comments
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randocalrissian
randocalrissian
4 years ago
They perhaps forget to look at how many new builds were delayed/canceled/etc due to the timber price spike.
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Doug78
Doug78
4 years ago
Running out of inventory perhaps?
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Zardoz
Zardoz
4 years ago
Reply to  Doug78
Inventory is up in these parts, and I’ve read the same about a few other places.
A few price drops here and there, and sales for at and a little below asking.  Unheard of 2 months ago.

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Doug78
Doug78
4 years ago
Reply to  Zardoz
When prices rise rapidly people tend to not put their house on the market so inventory drops as the available houses get sold. If you are seeing inventory up where you live then maybe that is a sign that people sensing a top are starting to put their houses on the market.
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randocalrissian
randocalrissian
4 years ago
Reply to  Doug78
This is all new builds
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Doug78
Doug78
4 years ago
Reply to  randocalrissian
Oh I see now.
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conservativeprof
conservativeprof
4 years ago
Here is a likely explanation. New home prices have soared. Builders are putting new homes for bid as well as adding escalator clauses. No more fixed price houses months in advance unless the home is almost built. In my subdivision of new homes, I have seen incredible price increases since December 2020. I locked in a base price of $447,000 in November 2020. When I closed in late April 2021, the base price had increased to $492,000. Only 1 final unit remains. It has a base price of $549,000 (price decrease from $576,000). The final unit has an inferior location (too close to busy traffic) and floor plan (all bedrooms on second floor) than mine. I am not sure if the builder has put an escalator clause in the agreement. I know that many builders have escalator clauses. The model of new home sales is possibly collapsing. Builders want the deposit early to help finance construction. Buyers cannot secure loans without a fixed price.
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Zardoz
Zardoz
4 years ago
Reply to  conservativeprof
Once they burn through the people with the cash to overpay, look out below.
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RunnerDan
RunnerDan
4 years ago
Reply to  Zardoz
Nope!  There ain’t nuttin’ the Fed Reserve can’t fix with a little Fed pixie dust and some good ‘ole fashion government intervention for good measure, if needed!  Real estate, like the stock market, always goes up!
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FloydVanPeter
FloydVanPeter
4 years ago
Ok. Got it. SAAR is misleading.
What else can we tell from the data?
Does one-two months decline even means anything given the the historical jigsaw nature of this NSA chart? 
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