New Home Sales Take a Big Dive From Upward Revisions

April 26, 2022

•

4:17 pm

•

17 comments

•

Economics

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

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

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

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

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

Mortgage Rates

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

1. It’s important to understand that bubbles eventually pop on their own accord.

2. The Fed is now aggressively (allegedly) hiking into weakness. I suspect we will see 2 half-point hikes

3. Demand destruction from stock market and mortgages is easily enough to cause a recession https://t.co/Zts6OnphW3

— Mike “Mish” Shedlock (@MishGEA) April 26, 2022

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.

Thanks for Tuning In!

Please Subscribe to MishTalk Email Alerts.

Subscribers get an email alert of each post as they happen. Read the ones you like and you can unsubscribe at any time.

If you have subscribed and do not get email alerts, please check your spam folder.

Mish

Subscribe to MishTalk Email Alerts.

Subscribers get an email alert of each post as they happen. Read the ones you like and you can unsubscribe at any time.

This post originated on MishTalk.Com

Thanks for Tuning In!

Mish

17 Comments

Newest

Oldest Most Voted

Inline Feedbacks

View all comments

Six000mileyear

1 year ago

The first chart gave me an idea when I should start looking to buy a house.

Condition 1: Recession

Condition 2: Number of homes sold is within 10% of the home for sale.

…and when to buy.

Condition: Once the recession is officially over.

I’ll admit this guideline completely misses getting into the housing bubble after the DotCom crash, but it would have prevented one from getting caught in a collapsing market where liquidity dried up.

Jojo

1 year ago

In March 2022, San Mateo County home prices were up 7.9% compared to last year, selling for a median price of $1.6M. On average, homes in San Mateo County sell after 9 days on the market compared to 13 days last year. There were 607 homes sold in March this year, up from 603 last year.

link to redfin.com

Jojo

1 year ago

US home prices rose by nearly 20% year-over-year in February

By Anna Bahney, CNN Business

Updated 10:07 AM EDT, Tue April 26, 2022

(CNN) US home prices continued to surge higher in February.

Prices rose 19.8% year-over-year in February, an even higher rate than the 19.2% growth seen in January, according to the S&P CoreLogic Case-Shiller US National Home Price Index.

Phoenix, Tampa and Miami reported the highest year-over-year gains among the 20 US cities tracked by the index. Phoenix led the way for the 33rd consecutive month with home prices rising 32.9% from the year before. It was followed by Tampa and Miami, which saw 32.6% and 29.7% gains, respectively.

All 20 cities reported price increases in the year ending February 2022. In January, 16 cities saw year-over-year growth. Prices were strongest in the South and Southeast, but every region continued to show big gains.

“US home prices continued to advance at a very rapid pace in February,” said Craig J. Lazzara, managing director at S&P Dow Jones Indices. “That level of price growth suggests broad strength in the housing market, which is exactly what we continue to observe.”

….

link to amp.cnn.com

hmk

1 year ago

As far as the comment on the fed hiking into weakness, they have no choice. Most, not all, of the price increases are not transitory. Wages, housing, food and commodities. The fed was to far behind the curve in the 1970’s and hiked into weakness because we had stagflation. Not hiking then most likely would have exacerbated inflation with an even worse outcome. Having the free market set rates is the way to go I would think, but how does that ever happen?

Jojo

1 year ago

Reply to hmk

The FED is part of the government, even if they are supposedly politically independent. If they take steps to reign in inflation early and those actions cause Wall Street to crater, then the Washington DC politicians are going to be unhappy as their reelection plans may be affected. They are damned if they do and damned if they don’t.

KidHorn

1 year ago

Reply to Jojo

Pretty sure everything they do is done in conjunction with the US treasury.

strataland

1 year ago

Would/could
you buy your house today at today’s prices, today’s interest rates and at new
property tax assessment? I believe most would not or could not.

Jojo

1 year ago

Reply to strataland

Depends. If you have foreign suitcase money or are a corporation accumulating rental properties, which drives a lot of sales in the SF Bay Area, any time seems like a good time to buy.

Bam_Man

1 year ago

TSLA down 11% today and 20%+ in the past week.

That’s gonna leave a mark on the AARK.

KidHorn

1 year ago

Reply to Bam_Man

Have you seen how they’ve done lately? Tesla might be one of their better performing assets.

Doug78

1 year ago

Good call Mish on the timing of the next leg down of the bear market.

Sunriver

1 year ago

Input costs to building a home is so high, it may be a couple years before prices come down. Even with slowing demand. Looks like the months of supply for new homes will be going up quickly.