May 2020 Headline New Home Sales Remain Strong

Written by John Lounsbury and Steven Hansen

The headlines say new home sales improved month-over-month. Overall sales-to-date in 2020 remains better than any other year since 2007.

 

Analyst Opinion of New Home Sales

This month the backward revisions were down. Because of weather and other factors, the rolling averages are the way to view this series. The rolling averages improved. Sales again remained strong this month demonstrating the resilience of the new home market.

Note the following from U.S. Census:

Statement Regarding COVID‐19 Impact: Due to recent events surrounding COVID‐19, many governments and businesses are operating on a limited capacity or have ceased operations completely. The Census Bureau has monitored response and data quality and determined estimates in this release meet publication standards

Growth in 2020 to-date still exceeds every year since 2007.

This data series is suffering from methodology issues that manifest as significant backward revision. Home sales, in reality, move in spurts and jumps - so this is why we view this series using a three-month rolling average.

Econintersect analysis:

  • unadjusted sales growth accelerated by 29.9 % month-over-month.
  • unadjusted year-over-year sales were +14.3 % year-over-year.
  • the three-month unadjusted trend rate of growth accelerated by 1.0% month-over-month - is down 5.9 % year-over-year.

 

US Census Headlines:

  • seasonally adjusted sales up 16.6 % month-over-month
  • seasonally adjusted year-over-year sales up 12.7 %
  • the market expected (from Econoday) seasonally adjusted annualized sales of 600 K to 670 K (consensus 630 K) versus the actual at 676 K.

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

Seasonally Adjusted New Homes for Sale

The headlines of the data release:

Sales of new single-family houses in May 2020 were at a seasonally adjusted annual rate of 676,000, according to estimates released jointly today by the U.S. Census Bureau and the Department of Housing and Urban Development. This is 16.6 percent (±15.5 percent) above the revised April rate of 580,000 and is 12.7 percent (±23.5 percent)* above the May 2019 estimate of 600,000.

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