New Home Sales Steady With Respectable Growth

Steady is not usually the theme for new home sales which are usually volatile, but back-to-back reports point straight at extending growth at a respectable rate. New home sales came in at a 701,000 annual rate in September to just beat Econoday's consensus and follow a 706,000 rate in August. The three-month average is right at the current rates, at 691,000 in September and 700,000 in August and represent the two best showings since the sub-prime crash more than 10 years ago.

For home builders, however, the news is mixed as price concessions appear to be boosting sales. The median price for a single-family new home fell 7.9 percent in the month to $299,400 for year-on-year contraction of 8.8 percent. Compared to sales, which are up 15.5 percent year-on-year, the direction of prices would look to go higher.

Supply held steady in the month, at a lean 5.5 months relative to sales which may, though prices are weak, encourage more activity among builders. Sales breakdowns show steady strength with the West, however, showing the least consistency.

New home sales have been outperforming resales all year though Tuesday's existing home sales report also showed strength for single-family homes. The gains, especially for new home sales, are pointing to a long-awaited positive contribution from residential investment in the GDP account, this for the third quarter. Housing was a major negative for the 2018 economy but may yet, boosted by low mortgage rates and a strong jobs market, prove to be a useful positive for 2019.