Tag Archives: New Home Sales

CR: The Two Bottoms for Housing

Update: The Two Bottoms for Housing

by Bill McBride on 5/24/2013  

By request, I’ve updated the graphs in this post with the most recent data. Last year when I wrote The Housing Bottom is Here and Housing: The Two Bottoms, I pointed out there are usually two bottoms for housing: the first for new home sales, housing starts and residential investment, and the second bottom is for house prices.

For the bottom in activity, I presented a graph of Single family housing starts, New Home Sales, and Residential Investment (RI) as a percent of GDP.

When I posted that graph, the bottom wasn’t obvious to everyone. Now it is, and here is another update to that graph.

Starts, new home sales, residential Investment Click on graph for larger image.

The arrows point to some of the earlier peaks and troughs for these three measures.

The purpose of this graph is to show that these three indicators generally reach peaks and troughs together. Note that Residential Investment is quarterly and single-family starts and new home sales are monthly.

For the recent housing bust, the bottom was spread over a few years from 2009 into 2011. This was a long flat bottom – something a number of us predicted given the overhang of existing vacant housing units.

We could use any of these three measures to determine the first bottom, and then use the other two to confirm the bottom. These measure are very important and are probably the best leading indicators for the economy. But this says nothing about house prices.

Residential Investment and House prices The second graph compares RI as a percent of GDP with the real (adjusted for inflation) CoreLogic house price index through February.

Although the CoreLogic data only goes back to 1976, look at what happened following the early ’90s housing bust. RI as a percent of GDP bottomed in Q1 1991, but real house prices didn’t bottom until Q4 1996 (real prices were mostly flat for several years). Something similar happened in the early 1980s – first activity bottomed, and then real prices – although the two bottoms were closer in the ’80s.

Now it appears activity bottomed in 2009 through 2011 (depending on the measure) and real house prices bottomed in early 2012.

Read more at http://www.calculatedriskblog.com/2013/05/update-two-bottoms-for-housing.html#Xos7EeY1TxJ1aVPg.99

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CR: A few comments on New Home Sales

A few comments on New Home Sales

by Bill McBride on 5/23/2013 

Obviously the new home sales report this morning was solid with sales above expectations and significant upward revisions to prior months. I try not to react too much to the month to month ups and downs; the key points right now are that sales are increasing and will probably continue to increase for some time.

Now that we have four months of data for 2013, one way to look at the growth rate is to use the “not seasonally adjusted” (NSA) year-to-date data.

According to the Census Bureau, there were 153 thousand new homes sold in 2013 through April, up about 26.4% from the 121 thousand sold during the same period in 2012. That is a very solid increase in sales, and this was the highest sales for these months since 2008.

Note: For 2013, estimates are sales will increase to around 450 to 460 thousand, or an increase of around 22% to 25% on an annual basis from the 369 thousand in 2012.

Although there has been a large increase in the sales rate, sales are just above the lows for previous recessions. This suggests significant upside over the next few years.  Based on estimates of household formation and demographics, I expect sales to increase to 750 to 800 thousand over the next several years – substantially higher than the current sales rate.

And an important point worth repeating: Housing is historically the best leading indicator for the economy, and this is one of the reasons I think The future’s so bright, I gotta wear shades.

And here is another update to the “distressing gap” graph that I first started posting over four years ago to show the emerging gap caused by distressed sales.  Now I’m looking for the gap to start to close over the next few years.

Distressing GapClick on graph for larger image.

The “distressing gap” graph shows existing home sales (left axis) and new home sales (right axis) through April 2013. This graph starts in 1994, but the relationship has been fairly steady back to the ’60s.

Following the housing bubble and bust, the “distressing gap” appeared mostly because of distressed sales. The flood of distressed sales kept existing home sales elevated, and depressed new home sales since builders weren’t able to compete with the low prices of all the foreclosed properties.

I don’t expect much of an increase in existing home sales (distressed sales will slowly decline and be offset by more conventional sales). But I do expect this gap to continue to close – mostly from an increase in new home sales.

Distressing GapAnother way to look at this is a ratio of existing to new home sales.

This ratio was fairly stable from 1994 through 2006, and then the flood of distressed sales kept the number of existing home sales elevated and depressed new home sales. (Note: This ratio was fairly stable back to the early ’70s, but I only have annual data for the earlier years).

In general the ratio has been trending down, and I expect this ratio to trend down over the next several years as the number of distressed sales declines and new home sales increase.

Note: Existing home sales are counted when transactions are closed, and new home sales are counted when contracts are signed. So the timing of sales is different.

Read more at http://www.calculatedriskblog.com/2013/05/a-few-comments-on-new-home-sales.html#ajG83ZzszQ2EqyVZ.99

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CR: New Home Sales at 454,000 SAAR in April

New Home Sales at 454,000 SAAR in April

by Bill McBride on 5/23/2013  

The Census Bureau reports New Home Sales in April were at a seasonally adjusted annual rate (SAAR) of 454 thousand. This was up from 444 thousand SAAR in March (March sales were revised up from 417 thousand).

January sales were revised up from 445 thousand to 458 thousand, and February sales were revised up from 411 thousand to 429 thousand. Very strong upward revisions.

The first graph shows New Home Sales vs. recessions since 1963. The dashed line is the current sales rate.

“Sales of new single-family houses in April 2013 were at a seasonally adjusted annual rate of 454,000, according to estimates released jointly today by the U.S. Census Bureau and the Department of Housing and Urban Development. This is 2.3 percent above the revised March rate of 444,000 and is 29.0 percent above the April 2012 estimate of 352,000.”

New Home SalesClick on graph for larger image in graph gallery.

The second graph shows New Home Months of Supply.

The months of supply was unchanged in April at 4.1 months.

The all time record was 12.1 months of supply in January 2009.

New Home Sales, Months of Supply This is now in the normal range (less than 6 months supply is normal).

“The seasonally adjusted estimate of new houses for sale at the end of April was 156,000. This represents a supply of 4.1 months at the current sales rate.”

On inventory, according to the Census Bureau:

“A house is considered for sale when a permit to build has been issued in permit-issuing places or work has begun on the footings or foundation in nonpermit areas and a sales contract has not been signed nor a deposit accepted.”

Starting in 1973 the Census Bureau broke this down into three categories: Not Started, Under Construction, and Completed.

New Home Sales, InventoryThis graph shows the three categories of inventory starting in 1973.

The inventory of completed homes for sale is at a record low. The combined total of completed and under construction is also just above the record low.

The last graph shows sales NSA (monthly sales, not seasonally adjusted annual rate).

In April 2013 (red column), 45 thousand new homes were sold (NSA). Last year 34 thousand homes were sold in April. The high for April was 116 thousand in 2005, and the low for April was 30 thousand in 2011.

New Home Sales, NSA

This was well above expectations of 425,000 sales in April, and a solid report, especially with all the upward revision to previous months.  I’ll have more soon …

Read more at http://www.calculatedriskblog.com/2013/05/new-home-sales-at-454000-saar-in-april.html#FsoeEkjKiPHxQ7ds.99

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CR: New Home Sales at 417,000 SAAR in March

New Home Sales at 417,000 SAAR in March

by Bill McBride on 4/23/2013  

The Census Bureau reports New Home Sales in March were at a seasonally adjusted annual rate (SAAR) of 417 thousand. This was up from 411 thousand SAAR in February.

The first graph shows New Home Sales vs. recessions since 1963. The dashed line is the current sales rate.

“Sales of new single-family houses in March 2013 were at a seasonally adjusted annual rate of 417,000, according to estimates released jointly today by the U.S. Census Bureau and the Department of Housing and Urban Development. This is 1.5 percent above the revised February rate of 411,000 and is 18.5 percent above the March 2012 estimate of 352,000.”

New Home SalesClick on graph for larger image in graph gallery.

The second graph shows New Home Months of Supply.

The months of supply was unchanged in March at 4.4 months.

The all time record was 12.1 months of supply in January 2009.

New Home Sales, Months of Supply This is now in the normal range (less than 6 months supply is normal).

“The seasonally adjusted estimate of new houses for sale at the end of March was 153,000. This represents a supply of 4.4 months at the current sales rate.”

On inventory, according to the Census Bureau:

“A house is considered for sale when a permit to build has been issued in permit-issuing places or work has begun on the footings or foundation in nonpermit areas and a sales contract has not been signed nor a deposit accepted.”

Starting in 1973 the Census Bureau broke this down into three categories: Not Started, Under Construction, and Completed.

New Home Sales, InventoryThis graph shows the three categories of inventory starting in 1973.

The inventory of completed homes for sale is just above the record low. The combined total of completed and under construction is also just above the record low.

The last graph shows sales NSA (monthly sales, not seasonally adjusted annual rate).

In March 2013 (red column), 40 thousand new homes were sold (NSA). Last year 34 thousand homes were sold in March. This was the seventh weakest March since this data has been tracked. The high for March was 127 thousand in 2005, and the low for March was 28 thousand in 2011.

New Home Sales, NSA

This was at expectations of 419,000 sales in March, and a fairly solid report.  I’ll have more soon …

Read more at http://www.calculatedriskblog.com/2013/04/new-home-sales-at-417000-saar-in-march.html#X2gii8fpqgYSU7mZ.99

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CR: New Home Sales at 411,000 SAAR in February

New Home Sales at 411,000 SAAR in February

by Bill McBride on 3/26/2013  

The Census Bureau reports New Home Sales in February were at a seasonally adjusted annual rate (SAAR) of 411 thousand. This was down from a revised 431 thousand SAAR in January (revised down from 437 thousand).

The first graph shows New Home Sales vs. recessions since 1963. The dashed line is the current sales rate.

“Sales of new single-family houses in February 2013 were at a seasonally adjusted annual rate of 411,000, according to estimates released jointly today by the U.S. Census Bureau and the Department of Housing and Urban Development. This is 4.6 percent below the revised January rate of 431,000, but is 12.3 percent above the February 2012 estimate of 366,000.

New Home SalesClick on graph for larger image in graph gallery.

The second graph shows New Home Months of Supply.

The months of supply increased in February to 4.4 months from 4.2 months in January.

The all time record was 12.1 months of supply in January 2009.

New Home Sales, Months of SupplyThis is now in the normal range (less than 6 months supply is normal).

“The seasonally adjusted estimate of new houses for sale at the end of February was 152,000. This represents a supply of 4.4 months at the current sales rate.”

On inventory, according to the Census Bureau:

“A house is considered for sale when a permit to build has been issued in permit-issuing places or work has begun on the footings or foundation in nonpermit areas and a sales contract has not been signed nor a deposit accepted.”

Starting in 1973 the Census Bureau broke this down into three categories: Not Started, Under Construction, and Completed.

New Home Sales, InventoryThis graph shows the three categories of inventory starting in 1973.

The inventory of completed homes for sale is just above the record low. The combined total of completed and under construction is also just above the record low.

The last graph shows sales NSA (monthly sales, not seasonally adjusted annual rate).

In February 2013 (red column), 33 thousand new homes were sold (NSA). Last year 30 thousand homes were sold in February. This was the eight weakest February since this data has been tracked. The high for February was 109 thousand in 2005, and the low for February was 22 thousand in 2011.

New Home Sales, NSA

This was below expectations of 425,000 sales in February, but still a fairly solid report.  I’ll have more soon …

Read more at http://www.calculatedriskblog.com/2013/03/new-home-sales-at-411000-saar-in.html#aFrtr6uwQMoHjIft.99

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CR: Housing: The Two Bottoms

Housing: The Two Bottoms

by Bill McBride on 3/03/2013  

Last year when I wrote The Housing Bottom is Here and Housing: The Two Bottoms, I pointed out there are usually two bottoms for housing: the first for new home sales, housing starts and residential investment, and the second bottom is for house prices.

For the bottom in activity, I presented a graph of Single family housing starts, New Home Sales, and Residential Investment (RI) as a percent of GDP.

When I posted that graph, the bottom wasn’t obvious to everyone. Now it is, and here is another update to that graph.

Starts, new home sales, residential InvestmentClick on graph for larger image.

The arrows point to some of the earlier peaks and troughs for these three measures.

The purpose of this graph is to show that these three indicators generally reach peaks and troughs together. Note that Residential Investment is quarterly and single-family starts and new home sales are monthly.

For the current housing bust, the bottom was spread over a few years from 2009 into 2011. This was a long flat bottom – something a number of us predicted given the overhang of existing vacant housing units.

We could use any of these three measures to determine the first bottom, and then use the other two to confirm the bottom. But this says nothing about prices.

Residential Investment and House pricesThe second graph compares RI as a percent of GDP with the real (adjusted for inflation) CoreLogic house price index through December.

Although the CoreLogic data only goes back to 1976, look at what happened following the early ’90s housing bust. RI as a percent of GDP bottomed in Q1 1991, but real house prices didn’t bottom until Q4 1996 (real prices were mostly flat for several year). Something similar happened in the early 1980s – first activity bottomed, and then real prices – although the two bottoms were closer in the ’80s.

Now it appears activity bottomed in 2009 through 2011 (depending on the measure) and house prices bottomed in early 2012

Read more at http://www.calculatedriskblog.com/2013/03/housing-two-bottoms.html#1F67BIuweRXEJesB.99

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CR: New Home Sales at 437,000 SAAR in January

New Home Sales at 437,000 SAAR in January

by Bill McBride on 2/26/2013 

NOTE: Federal Reserve Chairman Ben Bernanke testimony Testimony by Chairman Bernanke on the Semiannual Monetary Policy Report to the Congress

Here is the C-Span Link

On New Home Sales:

The Census Bureau reports New Home Sales in January were at a seasonally adjusted annual rate (SAAR) of 437 thousand. This was up from a revised 378 thousand SAAR in December (revised up from 369 thousand).

The first graph shows New Home Sales vs. recessions since 1963. The dashed line is the current sales rate.

“Sales of new single-family houses in January 2013 were at a seasonally adjusted annual rate of 437,000 … This is 15.6 percent above the revised December rate of 378,000 and is 28.9 percent above the January 2012 estimate of 339,000.”

New Home SalesClick on graph for larger image in graph gallery.

The second graph shows New Home Months of Supply.

The months of supply decreased in January to 4.1 months from 4.8 months in December.

The all time record was 12.1 months of supply in January 2009.

New Home Sales, Months of SupplyThis is now in the normal range (less than 6 months supply is normal).

“The seasonally adjusted estimate of new houses for sale at the end of January was 150,000. This represents a supply of 4.1 months at the current sales rate.”

On inventory, according to the Census Bureau:

“A house is considered for sale when a permit to build has been issued in permit-issuing places or work has begun on the footings or foundation in nonpermit areas and a sales contract has not been signed nor a deposit accepted.”

Starting in 1973 the Census Bureau broke this down into three categories: Not Started, Under Construction, and Completed.

New Home Sales, InventoryThis graph shows the three categories of inventory starting in 1973.

The inventory of completed homes for sale was just above the record low. The combined total of completed and under construction is also just above the record low.

The last graph shows sales NSA (monthly sales, not seasonally adjusted annual rate).

In January 2013 (red column), 31 thousand new homes were sold (NSA). Last year only 23 thousand homes were sold in January. This was the ninth weakest January since this data has been tracked. The high for January was 92 thousand in 2005.

New Home Sales, NSA

This was above expectations of 381,000 sales in January. This is the strongest sales rate since 2008. This was another solid report. I’ll have more soon …

Read more at http://www.calculatedriskblog.com/2013/02/new-home-sales-at-437000-saar-in-january.html#JEGGhAuRiVj0wprP.99

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