The huge percentage jump is from a downward revision. The Census Bureau revised April from 623,000 units to 580,000 units.
Sales vs Expectations
Mortgage News Daily commented “For the second month in a row, sales of newly constructed homes outdistanced expectations.”
Factoring in the revision, sales beat expectations one month in a row but by a huge margin.
The Econoday consensus was 636,000 units in a range of 600,000 to 670,000.
Sales by Region
- Northeast: 32,000 up from 22,000 -6.4%
- Midwest: 73,000 down from 78,000 +45.5%
- South: 402,000 up from 349,000 +15.2%
- West 169,000 up from 139,000 +29.0%
New Home Sales 1963-Present
New home sales are back to a level below that in July 1963.
Perhaps the best way to look at things is to average things for the year. Jan 774K, Feb 716K, Mar 612K, Apr 580K, May 676K.
The average for 2020 is 670K, right about where we are now. New homes were thus one of the least Covid-impacted areas.
From the February 2011 low of 270,000 units it’s been a very slow recovery historically speaking.
There is no reason to expect an acceleration now.
Mish
Can anyone point to a single time we have had a recession with 20% unemployment and the result was higher housing prices a 5 years down the road?
The last short sale I bought was 2012 and that was 4 years after 2008, and RE prices were very depressed.
Lawrence Yun is right! See, it’s a great time to buy a house!
Just kidding…
Also a great time to sell.
Coronavirus: California sets another daily record as Bay Area surges past 20,000 cases
New cases rising rapidly around the state, not just attributable to more testing https://www.eastbaytimes.com/2020/06/23/coronavirus-california-sets-another-daily-record-as-bay-area-surges-past-20000-cases/
“Coronavirus: California sets another daily record as Bay Area surges past 20,000 cases. New cases rising rapidly around the state, not just attributable to more testing”
We had a lot of protest rallies. Hollywood Blvd. was packed for several blocks.
The economy is also opening back up. The Empire Center Mall parking lot, which had been largely empty for the last few months, was well represented with cars on Monday.
Of course, the OBVIOUS solution is to reduce lending standards to kick the can a bit further.
Consumer Financial Protection Bureau (CFPB) to the rescue.
Do away with DTI (debt to income) limit of 43% on qualified mortgages. “Win win” as borrowers will be allowed to get neck deep (deeper?) in debt AND taxpayers will be on the hook for a ginormous bailout of GSEs when (not if) it all blows up.
Every dollar that doesn’t go to interest payments is a dollar wasted!
January + February were boosted by warm weather and little snow.
Great news since new homes has a major impact on the economy.
If you believe remote work is here to stay, the trend will accelerate. Plus the largest cohort in history will become first time buyers
Long homebuilders and home suppliers for 5-10 years.
No way, young people are doing the worst in our financialized economy, so if they’re not already on the housing ladder they are unlikely to buy in at these inflated prices. Nearly every economic indicator looks grim (outside of central banker intervention) and you’re forecasting unicorns and rainbows.
How on earth does a gold trader believe so strongly in our Fed-based economy?