New Home Sales Meet Expectations

New home sales are not surging, coming in near expectations in October at a 495,000 annualized rate. Though the month's gain is 10.7 percent, it doesn't quite reverse the prior month's 12.9 percent plunge. Year-on-year new home sales are up a respectable looking 4.9 percent which, however, pales to the double-digit rates through most of the year.

Lack of supply is a key issue for the new home sector that is holding down sales, at only 5.5 months relative to sales which is down from 6.0 months in September. But actual new homes on the market are up slightly, at 226,000 which compares to 208,000 a year ago.

Unlike price data in this week's Case-Shiller and FHFA reports, there is no indication of improved traction in what belies the lack of supply in the market. The median price, at $281,500, is down a very severe looking 8.5 percent in the month with the year-on-year rate at minus 6.0 percent.

The Northeast is showing very solid strength, up more than 100 percent in the month though sales levels in this region make up only a tiny fraction of national sales. The South, by far the largest region for new home sales, showed key strength in the month with a 8.9 percent gain. Year-on-year, the Northeast is out in front with a 60 percent gain followed by the South with a 5.2 percent gain. The West, a key region for home builders, shows a disappointing 2.6 percent year-on-year decline with the Midwest bringing up the rear at minus 4.8 percent.

The housing sector remains uneven with this report confirming lack of strength in Monday's existing home sales report. Though there are indications, not in this report of course, of price traction in housing, conditions in the sector do not point to an increased chance for a December rate hike.

Recent History Of This Indicator:
Samples are small and monthly data move wildly but new home sales simply plummeted in September, down 12 percent to a 468,000 annualized rate. A gain is the consensus for October, to 499,000 for what would be a giant looking 6.6 percent burst. But even with this gain, the sales rate would still be well below August and could nevertheless raise questions over what is, in any case, a cautious outlook for the new home market.