New Home Sales Drop Again In Big Skid Towards Pre-Covid Levels

New Homes Sold and For Sale 2021-05

New Residential Sales

The New Residential Construction report shows another decline in new home sales.

Sales of new single‐family houses in May 2021 were at a seasonally adjusted annual rate of 769,000, according to estimates released jointly today by the U.S. Census Bureau and the Department of Housing and Urban Development.

This is 5.9 percent below the revised April rate of 817,000, but is 9.2 percent above the May 2020 estimate of 704,000.

In addition to the plunge in May, the Census Bureau revised April heavily lower from 863,000 to 817,000.

Consensus Misses Badly

The Econoday consensus estimates are interesting.

New home sales fell back sharply in April but are expected to rise in May to an annual rate of 868,000 versus April's 863,000.

The already sharp decline in April to 863,000 plunged further to a much sharper 817,000.

Headed Towards Pre-Covid Levels 

The pre-Covid high was 756,000 in January of 2020. The Covid surge high was one year later in January 2021 at 993,000. 

In between was the Covid low of 582,000 in April of 2020.

Seriously Distorted Numbers

These numbers are all seriously distorted by seasonal adjustments.

For example, in January of 2021, the peak rebound, there were 77,000 homes sold vs the widely reported 993,000 reported.

By the time the Census Bureau seasonally adjusted and annualized January sales, 77,000 turned into a reported 993,000.

Then economists take these seriously distorted numbers and compare them to Covid panic lows and report things like sales are up 9.2% from a year ago. 

The year-over-year comparisons will be seriously distorted in the other direction in January of 2022 to the alleged 993,000 figure. 

The January 2020 unadjusted number was 59,000 (translated into 756,000). Should January of 2022 fall to that level we will then see a report that says year-over-year sales are down 23%. 

Rebound Weakening

Distorted numbers aside, the economic rebound continues to weaken. That is the key takeaway from recent reports.

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