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Brian Wesbury
Chief Economist
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Bob Stein
Deputy Chief Economist
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 | New single-family home sales increased 6.6% in September |
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Implications: Today's report on new home sales beat the consensus, but remained at sluggish levels. The homebuyer tax credit, which required buyers to sign a contract by the end of April, moved future sales forward. As a result, new home sales, which are counted at contract, increased to a 370,000 annual pace in April. Since then, sales have averaged only a 294,000 annual pace. Given a growing population, new home sales should increase over the next several years to roughly 950,000. We believe the gains in sales over the past two months are the start of that trend. Meanwhile, the total number of homes for sale continues to decline, making room for a rise in home construction in future quarters.
In other recent housing news, the Case-Shiller index, a measure of home prices in the 20 largest metro areas around the country, declined 0.3% in August (seasonally-adjusted). The index is still up 1.7% versus a year ago. The FHFA index, a measure of prices for homes financed with conforming mortgages, increased 0.4% in August, but is down 2.4% in the past year. Home price measures should soon be feeling downward pressure from the lapse of the homebuyer tax credit. Once this "hangover" period is cleared, we expect a renewal of an upward trend in home prices.
Click here to view the entire report.
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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.
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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.
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