New Home Sales Defy Expectations and Retreat in October
Mortgage News Daily comments New Home Sales Defy Expectations and Retreat in October.
New home sales were expected to make a strong showing in October; the consensus of analysts polled by Econoday was for a sharp increase from the September level of 553,000 to 575,000 units. Instead, there was a steep decline, amplified by a major upward revision to the September estimate.
The U.S. Census Bureau and the Department of Housing and Urban Development estimate that October sales of newly constructed homes were at a seasonally adjusted annual rate of 544,000 units, falling well below the lowest of analysts' projections. The result was a decline of 8.9 percent from the restated September rate, an upward revision to 597,000 units.
The September revision gave new home sales their first uptick since May. With that single exception sales have declined steadily from the 653,000 estimate for that month and the October number lags the 618,000 sales pace in October 2017 by 12 percent.
- Northeast: Down 18.5 percent for the month and 46.3 percent compared to a year ago.
- Midwest: Down 22.1 percent for the month and 16.7 percent compared to a year ago.
- South: Down 7.7 percent for the month and 11.6 percent compared to a year ago.
- West Down 3.2 percent for the month and 1.3 percent compared to a year ago
New home sales peaked at 712,000 units in November of 2017 on a hurricane rebuilding surge.
Sales have trended lower for most of 2018. The year-over-year numbers next month will be grim
At the end of the reporting period there were an estimated 336,000 homes for sale, an increase of 17.5 percent in the inventory year-over-year. This is an estimated 7.4-month supply at the current rate, almost a month more than was estimated for the September inventory. Only 74,000 of the available homes were ready for occupancy.
Oops. It appears builders were more than a bit too optimistic in building homes that no one wants or can afford.
Mike "Mish" Shedlock