Home   Logon   Mobile Site   Research and Commentary   About Us   Call 1.800.621.1675 or Email Us       Follow Us: 

Search by Ticker, Keyword or CUSIP       
 
 

Blog Home
   Brian Wesbury
Chief Economist
 
Click for Bio
Follow Brian on Twitter Follow Brian on LinkedIn View Videos on YouTube
   Bob Stein
Deputy Chief Economist
Click for Bio
Follow Bob on Twitter Follow Bob on LinkedIn View Videos on YouTube
 
  New Single-Family Home Sales Increased 10.7% in October
Posted Under: Data Watch • Home Sales • Housing

 
Implications: New home sales posted a healthy gain in October, rebounding sharply from September's steep decline. Sales increased 10.7% in October to a 495,000 annual rate and are up 4.9% in the past year. The increased pace of sales more than offset a 3,000 unit rise in inventories, so the months' supply of new homes – how long it would take to sell all the homes in inventory at the current sales pace – fell to 5.5 months. That's right in line with the 5.6 months average over the past 20 years. It's important to remember that, even with October's jump in sales, the current pace of 495,000 new homes sold is still low relative to history. Given population growth rates, sales should roughly double to about 900,000 over the next few years. We think a few reasons have contributed to the slow rebound in the pace of sales. First, a larger share of the population is renting. Second, buyers have shifted slightly from single-family homes, which are counted in the new home sales data, to multi-family homes (think condos in cities), which are not counted in this report. Third, although we are seeing a thaw, financing is still more difficult than it has been in the past. The trend is what matters, though, and the trend in sales has been up and should stay that way in the year ahead. Although some analysts may jump on the weak price data in today's report, with median prices down 6% from a year ago, that reflects a shift in the "mix" of homes being sold, with sales growing fastest in lower-priced categories. We think the Case-Shiller and FHFA indexes are much better measures of home price trends, as they are insulated from the shift in the mix of homes sold. And this morning's FHFA index, which measures prices for homes financed with conforming mortgages, increased 0.8% in September and is up 6.1% from a year ago. This report sends the same signal as yesterday's Case-Shiller index, which suggests that price gains are (modestly) accelerating again, due in part to a lack of inventory in the housing sector. As a result, look for home construction to accelerate in 2016.

Click here for PDF version
Posted on Wednesday, November 25, 2015 @ 11:44 AM • Post Link Share: 
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.
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 © 2022 All rights reserved.