Wednesday, February 24, 2021

New Home Sales increase to 923,000 Annual Rate in January

by Calculated Risk on 2/24/2021 10:11:00 AM

The Census Bureau reports New Home Sales in January were at a seasonally adjusted annual rate (SAAR) of 923 thousand.

The previous three months were revised up.

Sales of new single-family houses in January 2021 were at a seasonally adjusted annual rate of 923,000, according to estimates released jointly today by the U.S. Census Bureau and the Department of Housing and Urban Development. This is 4.3 percent above the revised December rate of 885,000 and is 19.3 percent above the January 2020 estimate of 774,000.
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.

The last eight months saw the highest sales rates since 2006.   This was strong year-over-year growth.

The second graph shows New Home Months of Supply.

New Home Sales, Months of SupplyThe months of supply decreased in January to 4.0 months from 4.1 months in December.

The all time record high was 12.1 months of supply in January 2009. The all time record low is 3.5 months, most recently in October 2020.

This is at the low end of the normal range (about 4 to 6 months supply is normal).
"The seasonally-adjusted estimate of new houses for sale at the end of January was 307,000. This represents a supply of 4.0 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 low, and the combined total of completed and under construction is a little lower than normal.

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

In January 2021 (red column), 70 thousand new homes were sold (NSA). Last year, 59 thousand homes were sold in January

The all time high for January was 92 thousand in 2005, and the all time low for January was 21 thousand in 2011.

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