October Flashback
Before looking at the joke of a report for November, let’s recap what I said last month in New Home Sales Bounce 7.5 Percent From Negative Revisions
Last month I noted huge new sales negative revisions for August. This month the Census Department reports negative revisions for September.
If the pattern holds, there will be negative revisions next month too.
November New Residential Construction Report
With that introduction, please consider the New Residential Construction Report for November.
November Revisions
- August from 661,000 to 646,000
- September from 580,000 to 559,000
- October from 632,000 to 605,000
Negative Groundhog Day
Those revisions are on top of negative revisions in October and September, now lowered again.
Is this a joke or what? Negative groundhog day perhaps?
Ta Da!
November Preliminary – 640,000!
It took a while to compile the report today because the St. Louis Fed did not have numbers to download for November as of 1:00 PM or so central.
I entered the numbers and back revisions manually into my spreadsheet.
November Report Numbers
- New Home Sales Sales of new single‐family houses in November 2022 were at a seasonally adjusted annual rate of 640,000, according to estimates released jointly today by the U.S. Census Bureau and the Department of Housing and Urban Development.
- This is 5.8 percent (±22.7 percent)* above the revised October rate of 605,000, but is 15.3 percent (±13.0 percent) below the November 2021 estimate of 756,000.
- The median sales price of new houses sold in November 2022 was $471,200. The average sales price was $543,600.
- The seasonally‐adjusted estimate of new houses for sale at the end of November was 461,000. This represents a supply of 8.6 months at the current sales rate.
Not that anyone has any reason to believe the numbers, but there you go. Hooray, we have a reported 5.8 percent rise in new home sales in November.
New Home Sales Seasonally Adjusted Since 1963
Pleasing Bounce
With that reported 5.8 percent bounce in November of 2022 I am pleased to report sales are approaching the 665,000 number hit in July of 1963.
New Home For Sale Supply
Clean Sweep
This month, the census department revised the monthly supply for every month dating back for a full year.
The other revisions “only” went back to August. Not that supply figures would make any sense even if there were no revisions as the next chart elaborates.
New Homes For Sale By Stage of Construction
Stage of Construction Details
- Of the purported 461,000 homes for sale, 107,000 have not even started, nor are they likely to in this environment. A mere 64,000 are actually completed.
- To be generous, there are 354,000 homes for sale, that have at least been started, with 290,000 under construction.
Bear in mind that the month’s supply includes 107,000 homes that have not even been started.
What About Cancellations?
The Census Department does not subtract cancellations from its reports and cancellations due to rising mortgage rates have been huge.
To repeat, none of these revisions include cancellation and cancellation rates have been as high as 25 percent!
In declining sales environments and economic downturns (now), the Census Department dramatically overstates sales, even if we ignore revisions.
In economic upturns, the Census Department understates sales.
Existing Home Sales Crash
On December 21, I commented Existing Home Sales Decline 10th Month, Down Another 7.7 Percent
- Existing home sales are down 35.4% from one year ago.
- Existing home sales are down 37% since January.
That’s a transaction crash. And never have we seen such declines other than in recessions. Expect price to follow but nowhere near as fast as in 2008-2009.
Well, that’s OK because nearly everyone tells me jobs are going gangbusters. Are they?
The Philadelphia Fed Just Revised Jobs Lower by 1.2 Million for Q2
For discussion, please see The Philadelphia Fed Just Revised Jobs Lower by 1.2 Million for Q2
The discussion was a hotbed of discussion on Twitter just as was the discrepancy between GDP and GDI which should match.
The BEA hugely revised income lower and discrepancies in general resolve lower headed into or in recessions.
Income lower and jobs up? The economy is fine but housing, industrial production, and retail sales struggling.
OK, believe what you want.
Word of Advice
Census bureau housing reports are best read with a shot of Pepto Bismol in your whiskey while having a toke with Elon Musk.
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
Speaking at a Brookings Institute event, Fed Chair Jerome Powell told the audience that the run-up in home prices during the Pandemic Housing Boom qualifies a “housing bubble.”
“Coming out of the pandemic, [mortgage] rates were very low, people wanted to buy houses, they wanted to get out of the cities and buy houses in the suburbs because of COVID. So you really had a housing bubble, you had housing prices going up [at] very unsustainable levels and overheating and that kind of thing. So, now the housing market will go through the other side of that and hopefully come out in a better place between supply and demand,” Powell said.