With a healthy dose of skepticism, please consider the Census Department’s New Residential Construction report for April.
New Home Sales
- Sales of new single‐family houses in April 2023 were at a seasonally adjusted annual rate of 683,000.
- This is 4.1 percent (±11.8 percent) above the revised March rate of 656,000 originally reported as 683,000 and is 11.8 percent (±15.1 percent) above the April 2022 estimate of 611,000.
Note the margins of error by the Census Department, and it needs them.
I am pleased to report that new home sales are back above the July 1963 sales total of 665,000 and even the March 1983 high of 880,000.
Sales Price
- The median sales price of new houses sold in April 2023 was $420,800.
- The average sales price was $501,000.
For Sale Inventory and Months’ Supply
- The seasonally‐adjusted estimate of new houses for sale at the end of April was 433,000.
- Supply is 7.6 months at the current sales rate.
New Homes for Sale by Stage of Construction
New Homes for Sale
- Of the 432,000 homes allegedly for sale, only 70,000 are actually completed. Builders are much more reluctant this cycle to speculate on finished homes.
- Of the 432,000 homes allegedly for sale, 100,000 have not been started and may not be for a long time. This matches the high in the housing bubble, Great Recession era.
- New homes for sale, started but not finished, is 263,000 and sinking fast.
New Homes for Sale Supply
Supposedly, there is a 7.6 month supply of new homes at the current sales rate. But this includes 100,000 homes that have not even been started.
Another New Home Sales “Rose” Joke of a Report
March Flashback: Another New Home Sales “Rose” Joke of a Report
By the way, that 640,000 in February is now reported as 631,000 down from a revised 649,000 in January.
There is no particular reason to believe any of these numbers. And although there is an occasional upward revision, most of the revisions have been negative.
Lumber Futures
Lumber futures are way down the the record post-pandemic highs. Builders have been able to pass these savings along. Mortgage rates are another matter.
30-Year Mortgage Rates Approaching 7 Percent Again
For discussion of the fundamental and technical outlook for mortgage rates, please see 30-Year Mortgage Rates Approaching 7 Percent Again, Housing Will Suffer
As of May 23, the current average mortgage rate is 6.95 percent. Home builders have an advantage over existing home sellers because they can buy down rates.
I would caution on short-term interest rate buydown, especially for those stretching to buy a home. At the end of the buydown period, the rate will go up.
Home Prices Drop the Most in Eleven Years, New Listings Plunge
Yesterday, I noted Home Prices Drop the Most in Eleven Years, New Listings Plunge
Home prices are down 4.1 percent from a year ago. But that’s not even a drop towards improved affordability.
Existing Home Sales Decline for the 14th Time in 15 Months
Rounding out the home sales news, please note Existing Home Sales Decline for the 14th Time in 15 Months
There is no reason to believe things will change much for the better anytime soon as the standoff between buyers and sellers continues.
Many people are effectively trapped in their homes, unable or unwilling to trade a 3 percent mortgage for a 7 percent one.
This post originated on MishTalk.Com.
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Mish
There have now been 12 boom/busts in real-estate in the U.S. since WWII. The busts have all been
triggered by a flawed monetary policy, a correction for a loose monetary policy.
deposits. Deposits are the result of lending. Thus, banks can’t
attract outside savings to fund their assets. All bank-held savings
originate in the system, shifted from previously created deposits. I.e.,
bank lending is determined by monetary policy, not the savings practices of the
nonbank public.
consolidation of the banks. Section 11(b) of the Banking Act of 1933
should never have been amended. And it was amended due to the American
Banker Association’s politics, a partisan group.
“Many syndicators are racing to either raise funds or sell properties before tipping into foreclosure. Most hold balloon-payment loans that require repayment when they come due this year or next. Those syndicators face large payouts at a time when getting new, more affordable property loans will be difficult. Even firms with multibillion-dollar portfolios have used syndication to buy apartment buildings that no longer make enough money to cover debt payments, bond documents show.
“The bubble is going to start popping if these guys can’t get out of these deals in time,” said Ralls, of Acora Asset. Lenders also risk heavy losses.”