Tuesday, March 24, 2020

New Home Sales at 765,000 Annual Rate in February

by Calculated Risk on 3/24/2020 10:13:00 AM

The Census Bureau reports New Home Sales in February were at a seasonally adjusted annual rate (SAAR) of 765 thousand.

The previous three months were revised up, combined.

"Sales of new single-family houses in February 2020 were at a seasonally adjusted annual rate of 765,000, according to estimates released jointly today by the U.S. Census Bureau and the Department of Housing and Urban Development. This is 4.4 percent below the revised January rate of 800,000, but is 14.3 percent above the February 2019 estimate of 669,000. "
emphasis added
New Home SalesClick on graph for larger image.

The first graph shows New Home Sales vs. recessions since 1963. The dashed line is the current sales rate.

Even with the increase in sales over the last several years, new home sales are just at a normal level.

The second graph shows New Home Months of Supply.

New Home Sales, Months of SupplyThe months of supply increased in February to 5.0 months from 4.8 months in January.

The all time record was 12.1 months of supply in January 2009.

This is in the normal range (less than 6 months supply is normal).
"The seasonally-adjusted estimate of new houses for sale at the end of February was 319,000. This represents a supply of 5.0 months at the current sales rate."
New Home Sales, InventoryOn inventory, according to the Census Bureau:
"A house is considered for sale when a permit to build has been issued in permit-issuing places or work has begun on the footings or foundation in nonpermit areas and a sales contract has not been signed nor a deposit accepted."
Starting in 1973 the Census Bureau broke this down into three categories: Not Started, Under Construction, and Completed.

The third graph shows the three categories of inventory starting in 1973.

The inventory of completed homes for sale is still somewhat low, and the combined total of completed and under construction is close to normal.

New Home Sales, NSAThe last graph shows sales NSA (monthly sales, not seasonally adjusted annual rate).

In February 2020 (red column), 68 thousand new homes were sold (NSA). Last year, 57 thousand homes were sold in February

The all time high for February was 109 thousand in 2005, and the all time low for February was 22 thousand in 2011.

This was above expectations of 750 thousand sales SAAR, and sales in the three previous months were revised up, combined.  This was a strong report with sales up 14.3% year-over-year.  I'll have more later today.

This was prior to COVID-19 crisis.