The hit parade of negative revisions to new home sales continues. 
Census Department Numbers
- New Home Sales: Sales of new single‐family houses in July 2023 were at a seasonally adjusted annual rate of 714,000, according to estimates released jointly today by the U.S. Census Bureau and the Department of Housing and Urban Development. This is 4.4 percent (±12.8 percent) above the revised June rate of 684,000 and is 31.5 percent (±16.3 percent) above the July 2022 estimate of 543,000.
- Sales Price: The median sales price of new houses sold in July 2023 was $436,700. The average sales price was $513,000.
- For Sale Inventory and Months’ Supply: The seasonally‐adjusted estimate of new houses for sale at the end of July was 437,000. This represents a supply of 7.3 months at the current sales rate.
Note the margins of error in these New Home Sales reports.
New Home Sales Since 1963
New home sales are below where they were in 1972.
Revision Hit Parade
Here is the chart I posted last month.
The 697 posted last month is now 684. Negative revisions have generally been the case for months.
New Homes For Sale By Stage of Construction
Homes For Sale Discussion
The Census Bureau reports 437,000 homes are “For Sale”. From that, the bureau measures “months’ supply”.
But of those 437,000 homes for sale, only 75,000 have been completed.
Builder to prospect: “See this vacant lot? We call this a home for sale.”
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 12 percent or so, and practically guaranteed to be heavily revised next month on top of it all.
Existing-Home Sales Dip 2.2 Percent in July, Down 16 of Last 18 Months
Existing-home sales slipped in July as rising mortgage rates make housing prices the least affordable ever.
For discussion, please see Existing-Home Sales Dip 2.2 Percent in July, Down 16 of Last 18 Months
1) New one family houses sold was rising smoothly for about a decade. Volatility started in Xmas massacre in 2018.
2) Aug 2020 high at 1029. It exceeded Nov 1998 at 995.
3) July 2022 low was 543. It breached the 2018 low at 545, a spring.
4) Feb 2011 low was 270. From Feb 2011 to Aug 2020 high : 1029 – 270 = 759.
5) From 2020 high to July 2022 low : 1029 – 543 = 486.
6) New home sales retraced : 486/759 = 64%.
Builders might have land with permits and division, but they don’t build on that
land for decades, because it might be near a chemical plant, a dumpster, a flood zone…a useless vacant land that costs too much to clear.
Regional banks lending is rising m/m.
Of course none of these have been built yet.
I have the land and signed drawings and most of the permits.
Now where the heck did the money go?
Does the government report any data that isn’t revised to be worse later on? Bidenomics is the perfect name for an economy based on lies.
Yes a lot are revised up. For example first quarter GDP was initially reported as 1.1% and the final number is 2.0%.
Downward revisions are not isolated to Biden’s Admin but are a phenomena commonly seen when markets have inflected and are taking a different path from the models. This creates “revision momentum” when the final figures are released, in whichever direction that revision trend indicates. So again, more evidence of deflationary pressures in these numbers.
If The Fed allowed for true price discovery in rates, mortgage rates would be falling due to the lack of demand for home credit. With banks (and everyone else) seeing recession ahead, they have no choice but to tighten lending and increase the spread between 10s and mortgage rates. That spread has been bouncing along at its highest differential in over 30 years. Again, deflationary. Conditions are uber tight. Yet rates are high as if this is some kind of economic boom we’re in.
Why? Because of The Fed’s desperate desire to once again rise to prominence as Inflation Warriors and thus they spin the knobs on the economy, in the desperate hope they can fulfill their political masters’ desires to be not-Jimmy-Carter and get re-elected. and there’s your Bidenomics. Unfortunately their knobs aren’t really attached to anything.
I’ll say one thing though. Despite Yellen’s misfeasance of selling short term debt while rates were low and pivoting to long term sales now that rates are high, flooding the August market with on-the-run collateral might prevent a near term credit event. Foreign buyers have been very interested in this paper. This is an inadvertent outcome on Yellen’s part, as she is likely clueless about this effect, but dollar funding issues (ie hoarding) have *seemed* to be more benign over the past two weeks.
Right spot on!
JPowell has only raised rates 525 basis points over 15 months. Volcker raised the FFR 900 basis points in just 7 months back in 1981.
“Unfortunately their knobs aren’t really attached to anything.”
If the Fed raised the FFR by 50 basis points in September and then another 50 basis points by the end of the year, the knobs would become extremely attached.
The main problem is that the Fed took their foot of the gas late last year. Bullard stated last December that a 7% FFR may be needed. He’s most likely right.
There will be no recession without two pre-requisites:
1) A REAL housing downturn that leads us into a recession as it usually does.
2) A REAL downturn in financial markets to undue some of the wealth effect.
Right now, the FFR simply hasn’t been raised high enough to push us into a recession, and there will be no 2 or 3% core PCE inflation without a recession. That’s a FACT and JPowell knows it. He just doesn’t have the balls to push us into a recession.
And even if he does, Elizabeth Warren will rally Congress to pass rent & mortgage relief, thereby keeping us out a REAL recession.
So the Fed should allow for price discovery in rates only when they would fall? What about the decade plus of near zero rates? Yellen is certainly incompetent, to put it mildly; Argentina issued a 100 year bond…but the US? Banks would not have the investment losses they now have if she had been even a little prudent. Almost make you think it was deliberate, to force the consolidation/takeover of US banks by the likes of JP Morgan.