New Home Sales

October 26th, 2015 10:48 am | by John Jansen |

Via Stephen Stanley at Amherst Pierpont Securities:

After housing starts and existing home sales exceeded expectations in September, new home sales were a washout.  New home sales fell by a whopping 11.5% to 468K last month, the worst result of the year so far.  Sales were down in all four regions but were especially soft in the Northeast, falling by 62%, a testament to how volatile this data can be.  This drop is most likely statistical noise more than anything, but with concerns over the state of the economy in the wake of the August/early September hiccup in markets, we will need to hold our collective breath for a month and see whether the September soft patch a) was real and b) lasts long enough to make a difference in the big picture.  My suspicion is that the economy probably did slow down in September, as consumers and businesses paused for a moment to make sure everything would be OK after the scary market movements seen this summer.  However, I would look for the economy to quickly get back on track over the balance of the year.

The pause in new home sales allowed the inventory situation to improve.  The months’ supply of new homes on the market jumped from 4.9 to 5.8, only slightly below the reading traditionally associated with a balanced market (6 months).

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