Implications: The housing market continues to recover. New home sales rose 5.7% in September and are now at the highest levels since April 2010. Sales are up a very robust 27.1% from a year ago. Meanwhile, as the lower chart to the right shows, overall inventories remain close to record lows. The months' supply of new homes has now fallen to 4.5, the lowest since October 2005, well below the average of 5.7 over the past 20 years and not much above the 4.0 months that prevailed in 1998-2004, during the housing boom. The slight increase in new home inventories was all due to a rise in homes still under construction, showing that home builders are starting to ramp up activity. In the meantime, low inventories are helping push up prices. The median price of a new home was up 11.7% from a year ago in September, the second largest yearly increase since September 2005. One of the reasons for the increase in new home prices is that the high-end buyer is getting more active. Homes priced $400,000+ were 12% of the market in September 2011, but 18% in September 2012. In other recent housing news, the FHFA index, which measures prices for homes financed by conforming mortgages, increased 0.7% in August (seasonally-adjusted), is up 4.8% from a year ago, and is up at an 8.9% annual rate in the past six months. On the factory front, the Richmond Fed index, a survey of mid-Atlantic manufacturers, fell to -7 in October from +4 in September. Manufacturing reports have been mixed and are still consistent with mild plow horse-like growth in that sector and economy as a whole.
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Posted on Wednesday, October 24, 2012 @ 10:19 AM
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