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Thursday, February 13, 2014

MBA: New Home Purchases Up Sharply in January 2014

by Calculated Risk on 2/13/2014 12:51:00 PM

From the MBA: New Home Purchases Up Sharply in January 2014

MBA estimates that sales of new single-family homes were running at a seasonally adjusted annual rate of 543,000 units in January 2014, based on data from MBA’s Builder Applications Survey.

“While the big jump may appear to conflict with other data, such as MBA’s purchase application index and NAR’s existing home sales data that point to a weak market for existing homes, our Builder Application Survey estimate is consistent with reports of homebuilder sentiment that show strength in the market for new homes,” said Mike Fratantoni, MBA’s Chief Economist. “It is also worth noting that the significant January increase also followed a particularly slow pace of sales in November and December.”

The estimated 543,000 unit sales pace for January was an increase of 35 percent from December’s pace of 402,000 units. On an unadjusted basis, the MBA estimates that there were 38,000 new home sales in January 2014, a 36 percent increase from the level of 28,000 units in December 2013. The new home sales estimate is derived using mortgage application information from the BAS, as well as assumptions regarding market coverage and other factors.
A few comments:

1) The MBA Builder survey might be helpful in predicting Census Bureau reports, but there are larger swings in the MBA survey estimates (so the Census Bureau might report an increase for January, but not of the same magnitude as the MBA increase).

2) Last year, in January, the MBA estimates sales of 507 thousand (SAAR), and the Census Bureau reported sales at a 437 thousand pace (eventually revised up to 458 thousand).   So there might be revisions too.

3) Note that for December, the Census Bureau reported sales of 414 thousand (SAAR), and the MBA estimated sales at a 402 thousand pace.  I expect Census Bureau reported sales for December to be revised down.