Review Of Primary Race & Yield Capping

November’s new home sales were revised lower and December’s reading missed the low end of the estimate range. Specifically, in November, sales were revised down by 22,000 to 697,000. New home sales in December were 694,000 which missed estimates for 728,000 and the lowest estimate which was 719,000. This was the weakest new home sales reading since July. That doesn’t jive with the spike in starts, but the housing market isn’t as hot as starts suggest. This is still a slow and steady housing market though. That’s supported by the quarterly average of new home sales. The quarterly average was 699,000 which is 1,000 above Q3 and is the cycle high.

New home sales in the South have crashed in the past few months, which doesn’t correlate with the region’s demographic dynamics. It is the biggest housing region. As you can see from the bottom left chart below, sales fell from 410,000 to 347,000 in December which is the lowest reading since October 2018. It was the largest percentage sequential decline since March 2015. In 3 months, sales have fallen 94,000. This decline probably won’t continue.

Sales in the West have been on an unsustainable ramp as they were up 57,000 to 241,000. That’s 99.2% yearly growth which is the highest growth rate since April 1983. Even for a volatile index, this was a big spike. The other 2 regions didn’t have as huge changes as sales were down 4,000 sequentially in the Northeast to 30,000; sales rose 7,000 in the Midwest to 76,000.

The recent decline in long rates will help housing. The 30-year yield is at 2.06% which is near the record low of 1.9% it made last year. The median single-family new home sales price was $331,400 which is up 0.5% from last year. It is down 3.5% from the record high it made in November 2017. The median existing-home price is $274,500 which is 3.8% below the record high it made in June 2019. At the current sales pace, the supply of homes rose to 5.7 months from 5.5 months. The recent low was 5.3 months in September and the recent high was 7.4 months in December 2018. The inventory balance has improved since the end of 2018, but it’s not as tight as existing home inventory which is at a record low.

1 2 3
View single page >> |

Disclaimer: Please familiarize yourself with our full disclaimer here.

How did you like this article? Let us know so we can better customize your reading experience. Users' ratings are only visible to themselves.


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