February 2017 Headline New Home Sales Improve And Above Expectations

Written by John Lounsbury and Steven Hansen

The headlines say new home sales improved. The median sales price for homes declined. The rolling averages declined. However the data was above market expectaions.

Analyst Opinion of New Home Sales

On the surface, this looks like the second good month - a good start for 2017? The problem is backward revision which keeps the rolling averages declining.

This data series is suffering from methodology issues which manifest as significant backward revision - and this month the revisions were mixed. Home sales move in spurts and jumps - so this is why we view this series using a three month rolling average (rolling averages declined}.

Econintersect analysis:

  • unadjusted sales growth accelerated 3.8 % month-over-month.
  • unadjusted year-over-year sales up 8.9 % year-over-year. Year-over-year growth rate this month was below the range of growth seen last 12 months.
  • three month unadjusted trend rate of growth decelerated 0.4 % month-over-month - is up 4.9 % year-over-year.

    (Click on image to enlarge)

US Census Headlines:

  • seasonally adjusted sales up 6.1 % month-over-month
  • seasonally adjusted year-over-year sales up 12.8 % (last month was reported at +5.5%)
  • market expected (from Bloomberg) seasonally adjusted annualized sales of 550 K to 600 K (consensus 565 K) versus the actual at 592 K.

The quantity of new single family homes for sale remains well below historical levels.

Seasonally Adjusted New Homes for Sale

(Click on image to enlarge)

The headlines of the data release:

Sales of new single-family houses in February 2017 were at a seasonally adjusted annual rate of 592,000, according to estimates released jointly today by the U.S. Census Bureau and the Department of Housing and Urban Development. This is 6.1 percent (±17.3 percent)* above the revised January rate of 558,000 and is 12.8 percent (±18.0 percent)* above the February 2016 estimate of 525,000.

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