August new home sales were originally reported at 629,000 units at a Seasonally Adjusted Annualized Rate (SAAR).
Today the New Residential Sales report shows August at 585,000 units and September at 553,000.
Before diving into the dismal numbers, recall that on September 26 I reported New Home Sales Rise Following Huge Two-Month Downward Revisions.
That alleged 3.5% rise, is now seen as a 3.0% decline. And on top of that decline, September sales plunged another 5.5%
New Home Sales
Sales of new single‐family houses in September 2018 were at a seasonally adjusted annual rate of 553,000, according to estimates released jointly today by the U.S. Census Bureau and the Department of Housing and Urban Development. This is 5.5 percent below the revised August rate of 585,000 and is 13.2 percent below the September 2017 estimate of 637,000.
Sales Price
The median sales price of new houses sold in September 2018 was $320,000. The average sales price was $377,200.
For Sale Inventory and Months’ Supply
The seasonally‐adjusted estimate of new houses for sale at the end of September was 327,000. This represents a supply of 7.1 months at the current sales rate
Don’t Blame Hurricanes
The biggest decline in numbers was in the West.
Regional Numbers, in Thousands
- US Total: 553 -5.5%
- Northeast: 19 -40.6%
- Midwest: 72 +6.9%
- South: 318 -1.5%
- West: 139 -12.0%
New Home Sales Down 13.2% Year-Over-Year
This is the 4th consecutive month of new home sales declines. Existing Home Sales are Down for the 6th Consecutive Month.
There is no way to put lipstick on this pig.
Housing has peaked this cycle.
Mike “Mish” Shedlock
Ugly numbers, confirmed by both Pultegroup and Meritage who posted poor order growth with Q3 numbers. DFW is still showing positive growth of new construction sales, but momentum is fading with these higher rates. It’s going to be interesting to see what an “affordable” (aka stripped-down) starter home looks like next year. Even more interesting will be how builders try to spin a diluted product on a smaller lot for the same prices as a win-win. 🙂
Do you know what the average profit margin is on the average new build? Is it generally a certain percentage of list price or a set amount of cash. I imagine it would be lower if its part of a new subdivision where they are doing mass volume? When I have consulted for a custom new build the average flat fee among builders was about 50k above cost to do the job.
I’m looking to buy a rental property with cash, so keep on raising interest rates
Stock market declining will not help these numbers either. Keep raising those interest rates and it is a perfect storm for housing.
I second Latkes request for default order of the articles to be “Newest.” I also noticed it recently changed to “best.”
The current incipient contraction cycle illustrates how tightly asset prices are tied to the cost of financing. I still maintain that the relative percentage increase in interest rates matters much more than the absolute level of rates. If the Fed hikes rates from 0.25% to 2.00% and prime moves from 3.25% to 5.00%, that is roughly a 50% increase in monthly debt payments for those paying mostly interest at the prime rate. In the last 18 months, many rolling over their debt on illiquid assets have gone from making money to not being able to pay their bills, despite 5.00% interest being historically “reasonable,” Also, there can be no buyers to bail them out since the spread that made these investment viable at such a high price is no longer there. I cannot accept that the Fed and other high-ranking financial experts are somehow not aware of this.
I have default order on my screen as newest. You can set it personally. Perhaps you clicked on that accidentally. I will bring it up with the Maven in case they changed it but I do not think so. Anyone else seeing a change from newest?
Mine suddenly defaulted to best a few days ago, but I selected newest in the dropdown and haven’t had any problems since.
Mine also suddenly defaulted a few days ago. I must use the drop down to request newest each time I visit the site. iPhone
Same thing happened to . Default switched to BEST…once I figured it out switched back to NEWEST….
If I use window internet explorer I can’t do anything on the site, no posting, and the default setting is for older posts. I have to use chrome or my mac when I want to post or change the default or even view replies. This site doesn’t work with windows.
Yes, my default changed itself a couple days ago. I just changed it back.
My default is newest. I don’t have a best option, just oldest, popular and fresh.
Correction my default is best. I was referring to the sort options.
Woo-Hooo!
And mortgage rates are even higher this month. That should be a big help!