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New Home Sales Take a Big Dive From Upward Revisions

New home sales declined 8.6 percent in March and are down 12.6 percent from a year ago.
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New home sales data from commerce department, chart by Mish

New home sales data from commerce department, chart by Mish

New Home Sales 

  • Sales of new single‐family houses in March 2022 were at a seasonally adjusted annual rate of 763,000, according to estimates released jointly today by the U.S. Census Bureau and the Department of Housing and Urban Development. 
  • This is 8.6 percent  below the revised February rate of 835,000 and is 12.6 percent below the March 2021 estimate of 873,000. 

Sales Detail Since 2000

New home sales data from commerce department, chart by Mish

New home sales data from commerce department, chart by Mish

Notes

  • The unadjusted number puts a better perspective on things. In March, there were 72,000 new homes sold. At a seasonally-adjusted annualized rate (SAAR) new home sales get reported at 763,000
  • The alleged supply of homes for sale is also misleading. It includes homes not even started and may not be completed for over a year.

New Homes by Stage of Construction

New home sales data from commerce department, chart by Mish

New home sales data from commerce department, chart by Mish

For Sale Construction Details 

  • 406,000 New Homes For Sale
  • Only 36,000 Actually Built 
  • 110,000 Not Started
  • 259,000 are Under Construction

Realistically, there are 295,000 homes for sale not 406,000. The 110,000 not started yet is a new record that tops the housing bubble years. 

When buyers dry up, and it's happening now, who knows if and when those not started yet actually get started.  

Months Supply

New home sales data from commerce department, chart by Mish

New home sales data from commerce department, chart by Mish

The seasonally‐adjusted estimate of new houses for sale at the end of March was 407,000. This represents a supply of 6.4 months at the current sales rate. 

That is a grossly distorted number because it includes 110,000 homes not yet started. I post it as calculated by the Census Department

Sales Price 

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The median sales price of new houses sold in March 2022 was $436,700. The average sales price was $523,900.   

Mortgage Rates 

Mortgage rates courtesy of Mortgage News Daily 

Mortgage rates courtesy of Mortgage News Daily 

Final Rush? 

Last month new home sales were reported at 772,000 SAAR. The Census Department revised February from 772,000 SAAR to 835,000 SAAR. 

I strongly suspect people rushed to beat rising mortgage rates. 

Sales took a dive in March on steep mortgage rate hikes. The average mortgage rate is now 5.32%.

New and existing home sales face enormous headwinds at these rates. A housing slump has started and will accelerate from here. 

In addition to cheap mortgages, a strong stock market also fueled home purchases, especially second homes. That's a second major headwind on homes.

A Word About the Fed and Recessions

Expect More Stock Market Pain Because It's Coming

Meanwhile, please consider my April 22 post Expect More Stock Market Pain Because It's Coming

Today looks very nasty again. Expect more action like this.

 This post originated at MishTalk.Com.

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