New homes sales surged 12.4% in November according to the Census Bureau's New Residential Construction Report.
That takes the estimate to just under the number of new sales reported last month.
- New Home Sales: Sales of new single‐family houses in November 2021 were at a seasonally adjusted annual rate of 744,000.This is 12.4 percent above the revised October rate of 662,000, but is 14.0 percent below the November 2020 estimate of 865,000.
- Sales Price: The median sales price of new houses sold in November 2021 was $416,900. The average sales price was $481,700.
- For Sale Inventory and Months’ Supply: The seasonally‐adjusted estimate of new houses for sale at the end of November was 402,000. This represents a supply of 6.5 months at the current sales rate.
What's Going On?
- For October, the bureau reported 745,000 new home sales.
- For November, the bureau reports 744,000 new home sales.
- This is 12.4% rise because the bureau revised October down to 662,000.
Strong or Weak Report?
The lead chart puts things into proper perspective. The report is certainly not strong nor is it particularly weak.
However, the surge is well under the Econoday Consensus of 770,000 homes, no doubt influenced by last month's report.
Economists tend to look at the current numbers and project them forward.
Actual new home sales in November (assuming no revisions) were 53,000 units.
The Census Bureau seasonally adjusts that then annualizes it to report sales of 744,000.
Every month, one needs to understand these reporting idiosyncrasies.
New Home sales and Home for Sale
Assuming you believe the seasonal adjustments and the underlying numbers, there is about a 6.5 month supply of new homes for sale.
A 6.5 month supply is on the top end of the range since 2012.
However, that number is a statistical lie as the following chart shows.
New Homes For Sale By Stage of Construction
Purportedly there are 405,000 new home for sale. However, a record 107,000 of them are not even started.
Actual completed homes for sale is 40,000 less than a tenth of what is allegedly for sale.
The best way to look at things is what builders are actually doing. That number is speculative homes under construction plus those finished.
Subtract 107,000 from 405,000 to get a better estimate. The true supply of news homes built (or being built) on spec is about 298,000.
There is No Predictive Power in Fed Projections
If you think the Fed, Fed Fund futures, or current rates predict anything, you may wish to reconsider.
In case you missed it, please see There is No Predictive Power in Fed Projections
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