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.
Report Details
- 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.
Unadjusted Numbers
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
Month’s Supply
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.
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Value added
produced or booked? In the past industries were concentrated in the cities and
that is where most wealth was produced. Today cities do not contain industry.
Instead they contain much of the knowledge workers whose work is not production
but organization of production. The actual production takes place outside of
the big cities now and in the countryside or even in different countries. The
end result is that the only reason why people would live in a city is because
of the attractiveness of big city life in culture, restaurants, a more liquid
job market and the sundry variety of experiences. They are no longer strictly
necessary for the production of goods and services since all of them can and
are produced outside of the cities.
but since their value comes from the knowledge of the individuals and not from
the installations those people could be moved out of the city at a moment’s
notice and easily reconstitute the headquarters in another place. The company
would survive. Before, that couldn’t have happened because although the knowledge
workers were in the city, the factories were there too and could not be moved. This
brings up the fact that where the value-added occurs and where it is booked are
rarely the same place and that when we say that this or that city produces X
amount of wealth it is not a correct statement. Since knowledge workers and
their support workers make up the major cohort of big-city dwellers and that they are
mobile, I would say that big cities are in the most exposed position that they
have ever been since the cities started long time ago. Their principle
attractiveness lies not on their ability to produce but now rely on their
ability to amuse their inhabitants in order to keep them there.