The divergence between new home sales and existing home sales widened further in September with a huge surge in new home sales.
Expectations vs Reality
- The Econoday consensus was for new home sales for September to be 685,000 at a Seasonally Adjusted Annualized Rate (SAAR). That was an expected jump of 9,000 (about 1.3 Percent).
- The Commerce Department reports new home sales at 759,000 SAAR. That’s a jump of 12.3 percent.
New Residential Sales September 2023 Details
- New Home Sales: Sales of new single‐family houses in September 2023 were at a seasonally adjusted annual rate of 759,000,.This is 12.3 percent (±16.6 percent) above the revised August rate of 676,000 and is 33.9 percent (±22.9 percent) above the September 2022 estimate of 567,000.
- Sales Price: The median sales price of new houses sold in September 2023 was $418,800. The average sales price was $503,900.
- For Sale Inventory and Months’ Supply: The seasonally‐adjusted estimate of new houses for sale at the end of September was 435,000. This represents a supply of 6.9 months at the current sales rate.
New Home Sales Since 1963
New Homes For Sale By Stage of Construction
Stage of Construction Details
- Of the allegedly 435,000 homes for sales, 105,000 have not even been started.
- Only 75,000 have been completed
- 255,000 are under construction.
These numbers make a mockery of 6.9 percent supply.
Month’s Supply
Based on a fictitious number of homes for sale, we can calculate fictitious supply in months at the current rate of fictional sales, plus or minus 16 percent or so.
Median New Home Sales Price
Existing Home Sales Drop Another Two Percent to a 13-Year Low
On October 19, I noted Existing Home Sales Drop Another Two Percent to a 13-Year Low
Existing home sales are down 37.5 percent in less than two years.
Home sales were 6.34 million in January of 2022 at a seasonally-adjusted annualized rate. They are now 3.96 million.
For more on existing home sales please see the above link.
QT is contractionary. As long as reserves continue to decline, housing prices will adjust.
set up for a real catastrophe next 5 to 10 years.
The nondescript northwest Washington town where I live has experienced the same spectacular home price inflation that is so widespread, prices perhaps doubling in the last 4 years. This after years of 10%+ annual increases. A couple of years ago our local market was briefly cited in national statistics as having the highest quotient of all-cash sales as any other U.S. market. When I mentioned this to my friend, an attorney in the big Washington city, they said that was probably because buyers here probably could not qualify for mortgages. They thought they were making a joke, but I think they may have been right! I explain to visitors looking for homes here now that the $160,000 homes in my neighborhood sell for more than $1 million. Thank you for letting me share.
I thought certainly someone would explain the divergence between exiting and new home sales is due to 1.) builders are willing to finance the mortgage at a lower rate than the banks, 2.) Existing home supply is limited by existing owners not wanting to give up their 3% mortgages and take on a new 8% mortgage.
Hakeem 0:4 Matt.
The new speaker of the house was talking about a Systemic Change.
The 3M indicates what may happen. There will be a test, whether u like it or not.
When and how far below nobody knows
I live near the epicenter of the housing boom on the northeast side of Colorado Springs. I think there is some truth to the numbers. I just don’t know how it can be with prices and interest rates so far beyond what wages can support….
Don’t forget that the Bank of Mom and Dad has many branches in the United States…
Bidenomics is working. 2T deficits, a new normal, buys a lot of new homes.
1) New privately owned housing units under construction, total : 1.7M, a new all time high.
2) New privately owned housing units under construction, 5+ units : 1.0M, an
all time high.
3) 3M [1W] was zero between Mar 2020 and Jan 2022. It rose vertically up, built
a Backbone in Mar 6/13 2023, 5.06%/4,52% and cont slightly up, reaching an
altitude of 5.63%.
4) The 3M stalled. It might turn around, reach/breach the BB before filling Oct 3/10 2022 gap, 3.45%/3.67%, or test 2019 high @2.5%.
Question. Do we know how many sales are going to investment buyers? Are investment firms making these purchases to increase rental stock and thus taking more homes away from middle income families? Or could be investors trying to find a place to keep money. I live near a resort area and housing construction is strong, but few primary residents, all second homes. Stock market may not be safe so move to Re.
We have a lot of investors purchasing in our condo complex. They don’t really care about overpaying as they can get enough rent to cover expenses and make a profit. A lot of them are paying cash.
Or, Re may not be safe, too illiquid, move to equities, much more liquid, or just commodities and just gamble every day.
There’s a house on the way to work that some dude built and wants $863K. To say this is massively overpriced would be the biggest understatement of the year.
The Fed absolutely screwed up housing, and the only fix is a real recession that takes us above 8% unemployment. All you hear about is rates have to go lower, but NOBODY in the real estate or finance markets care one hoot about much lower home prices being part of the solution.
It’s a JOKE!
Not sure where the data is coming from. If this is the realtor’s providing information then we know (like the past) they cook the books. But I guess since most everyone else is it ok.
Prices are unsustainable. A two year supply of new homes must sell off or sell back to the banks.
…and then the banks will take a loss, and they are already getting sheared by commercial property crashing.
In 2007, they were routinely reporting new home sales numbers of 700,000, 800,000, etc. The actual numbers, as Mike pointed out back then, were under 100,000. It was all BS. Also, in 2007, employment was being grossly overstated by the birth death idiocy,
and was revised lower by 600,000 jobs in Feb of 2008, such revision buried on the bottom of page 8 in every paper in the country, if it was reported at all. Does anyone else feel the coming of a spectacular air pocket if and when the fiscal side shuts down for the pre election fight? Or maybe it will never shut down?
Data Chinafication!!! Politics is the cancer that keeps spreading and has no cure.
New home buyer atre gaming the FED.
They know mortgage rates will be back at 3 percent within a couple years to refinance.
Good luck using “hope” as a financial strategy
Unfortunately that strategy represents high leverage and can lead to a price crash once everyone wants to sell at once.
Even if someone is trying to game the fed they still have to qualify for the current interest rate and have a significant downpayment.
UP them %rates ! 10% , just like in good old times when life was still wonderful !!