Wednesday, November 25, 2020

New Home Sales at 999,000 Annual Rate in October

by Calculated Risk on 11/25/2020 10:12:00 AM

The Census Bureau reports New Home Sales in October were at a seasonally adjusted annual rate (SAAR) of 999 thousand.

The previous three months were revised up.

Sales of new single-family houses in October 2020 were at a seasonally adjusted annual rate of 999,000, according to estimates released jointly today by the U.S. Census Bureau and the Department of Housing and Urban Development. This is 0.3 percent below the revised September rate of 1,002,000, but is 41.5 percent above the October 2019 estimate of 706,000.
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.

This is the third highest sales rate since 2006 (just below the last two months).

The second graph shows New Home Months of Supply.

New Home Sales, Months of SupplyThe months of supply was unchanged in October at 3.3 months from 3.3 months in September.

The all time record high was 12.1 months of supply in January 2009. The all time record low is 3.3 months in September and October 2020.

This is below the normal range (about 4 to 6 months supply is normal).
"The seasonally-adjusted estimate of new houses for sale at the end of September was 284,000. This represents a supply of 3.6 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 low, and the combined total of completed and under construction is lower than normal.

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

In October 2020 (red column), 80 thousand new homes were sold (NSA). Last year, 55 thousand homes were sold in October.

The all time high for October was 105 thousand in 2005, and the all time low for October was 23 thousand in 2010.

This was slightly above expectations and sales in the three previous months were revised up. I'll have more later today.