Despite 18% Plunge, New Home Sales Year-To-Date Are Doing Well

New home sales plunged 18.2% in February, but that's not the best way of looking at the data.

New Home Sales Analysis

Earlier today I noted that seasonally-adjusted sales month-over-month were down 18.2%. 

But that's not the best way of looking at things. 

The lead chart shows that year-to-date new home sales have been up 5 consecutive years and flat or up every year since 2011. 

Year-to-Date Percent Change

New Home Sales Year-to-Date Percent Change 2021-02

Year-to-date, new home sales are up 12.3% from a year ago despite the 18.2% decline in month-over-month seasonally adjusted sales.

Distortion Comparison

Seasonally-adjusted and non-adjusted numbers have issues. 

Huge changes not only affect the current month but make for very easy (or difficult) comparisons the following year. 

Comparing the current month to the same month a year ago brings out those distortions. 

A way to minimize the distortions is to do year-to-date comparisons as I did. The weakness in doing so is that year-to-date totals can easily miss trend changes.

The best way to deal with things is to look at both seasonally-adjusted and unadjusted numbers knowing both have their own set of problems.

With new home sales year-to-date steadily rising, there is no indication yet of a trend change in what has been a strong housing market. 

For a discussion of the month-over-month seasonally-adjusted numbers, please see New Home Sales Dive Sharply in February, Down Over 18%.

How did you like this article? Let us know so we can better customize your reading experience.


Leave a comment to automatically be entered into our contest to win a free Echo Show.