Home Logon FTA Investment Managers Blog Subscribe About Us Contact Us

Search by Ticker, Keyword or CUSIP       

Blog Home
   Brian Wesbury
Chief Economist
X •  LinkedIn
   Bob Stein
Deputy Chief Economist
X •  LinkedIn
  New Single-Family Home Sales Boomed 9.6% in January to a 468,000 Annual Rate
Posted Under: Data Watch • Home Sales • Housing
Supporting Image for Blog Post

Implications: Well, that was a pleasant surprise! Despite terrible weather and what most economists thought was going to be a drop, new home sales surged 9.6% in January, coming in at a 468,000 annual rate, the highest level since July 2008. Although we still believe weather has been suppressing both home construction and sales, today's report also supports our theory that some of the recent weakness in existing home sales can be attributed to a lack of inventory, causing potential buyers to look more in the new home market. The surge in new home sales also undermines the theory that higher interest rates are holding back sales. The US had a bubble in housing during 2003-07, when 30-year mortgage rates averaged 6.1%. Today they are 4.4%. Adjusted for inflation, real mortgage rates are actually a little bit lower today than they were back in 2003-2007. The months' supply of new homes – how long it would take to sell all the new homes in inventory – declined to 4.7 in January, well below the average of 5.7 over the past twenty years. As a result, as the pace of sales continues to recover in the years ahead, homebuilders still have plenty of room to increase both construction and inventories. Another way to think about it is that the construction of new homes can outpace a rising pace of sales. On the price front, the median sales price of a new home was up 3.4% from a year ago, while average prices are up 5.2%. In other recent housing news, the Case-Shiller index, which measures home prices in the 20 largest metro areas, increased 0.8% in December and was up 13.4% in 2013. Recent price gains have been led by Miami, Detroit, and Atlanta. The FHFA index, which measures prices for homes financed with conforming mortgages, also rose 0.8% in December and was up 7.7% in 2013. The annual increase in the Case-Shiller index and the FHFA index were both the largest since 2005. On the manufacturing front, the Richmond Fed index, a measure of mid-Atlantic manufacturing activity, fell to -6 in February from +12 in January. We see this as weather-related and not a reason to worry, unless negative readings continue into the Spring.

Click here for a PDF version
Posted on Wednesday, February 26, 2014 @ 11:25 AM • Post Link Print this post Printer Friendly

These posts were prepared by First Trust Advisors L.P., and reflect the current opinion of the authors. They are based upon sources and data believed to be accurate and reliable. Opinions and forward looking statements expressed are subject to change without notice. This information does not constitute a solicitation or an offer to buy or sell any security.
The information presented is not intended to constitute an investment recommendation for, or advice to, any specific person. By providing this information, First Trust is not undertaking to give advice in any fiduciary capacity within the meaning of ERISA, the Internal Revenue Code or any other regulatory framework. Financial professionals are responsible for evaluating investment risks independently and for exercising independent judgment in determining whether investments are appropriate for their clients.
Follow First Trust:  
First Trust Portfolios L.P.  Member SIPC and FINRA. (Form CRS)   •  First Trust Advisors L.P. (Form CRS)
Home |  Important Legal Information |  Privacy Policy |  California Privacy Policy |  Business Continuity Plan |  FINRA BrokerCheck
Copyright © 2024 All rights reserved.