Jack Dunn - Reclaiming Common Sense

Will Good News be Reported?


New Home Construction data and New Home Sales data are important to the US Economy. New construction spurs job growth. New home sales spur retail growth, especially as it relates to Home and Garden Sales, Electronic and Appliance Sales, and Home Furnishing sales. We are nowhere near the heydays of 2005 and 2006 for units sold. We have been having a good year this year - better than 2008-2016, year to date. The problem is that we are still "stuck in the 1990s" for units started and completed and sold. The data this month, and during future months, could be impacted by Hurricane damage. Units under construction may stay steady. Units completed may fall as they are delayed due to damage. Units started may fall due to resources being used to rehabilitate damaged existing properties or delayed as damaged new construction need to be repaired.


Starts tend to rise a little  during September as people build for next Spring. Last year we saw 67,400 starts . The bottom range should be 69,000 units. Anything under 71,900 places us at a level lower than we were during 1990 through 2007.  The most probable range is 74,000 to 77,000 units.


Units Under Construction have been rising - Approaching 1.2 Million Units. The 1.1 million break point is within reach. Will this number grow because fewer are completed? Will it surge toward 1.3 million or 1.4 million within the next year as replacement homes are built due to Hurricane Irma and Hurricane Harvey? Expect 1.1 to 1.2 million units under construction.


Completions dropped September to September last year - Should head higher this year. We had over 100,000 completions last month. The problem here is that we could see month to month improvement or weakening. We could see annual growth or weakening.How many people were selling existing homes to purchase new homes? How many existing homes were damaged in the storms? Will people push for under construction units instead of repairing their existing homes? Will this demand spur completions to be advanced prior to the end of the year?


New Home Sales could break through 50,000 units .Units sold during September could rise or fall by 10% from the August level of 45,000 units . If there is a 10% increase then 50,000 units is very possible. Units could improve by 1% to 5% from last September's 44,000 units sold. There has been an existing home inventory shortage. Expect a number under 50,000 units sold. That said, do not be surprised if new home sales soar as people move from damaged existing homes to ready new homes. Also, don't be surprised if new or existing homes falter as people who had homes to sell are unable to sell them until they are repaired, meaning one of the sources of new home buyers, existing home sales, dries up for a period of time. 


Another September Record Average Sales Price is Probable. We have set two  average sales price records for September the past two years.The question is will we hit $374,900 or 379,900 or $384,900? Once again, this is a factor of supply and demand. Is there supply in the areas where it is needed? Is there demand?The Census published an August 2017 Fact sheet for Florida and Texas. It states that 13% of new construction authorization for 2016 was in Texas and Florida. It does not have any information on Starts, Completions, or under construction or sales. This fact sheet may be a FACT (False Assertion Considered to be True) Sheet.


Will the non-seasonally adjusted data be adjusted to ignore any success, or any failure, in the market? Will they tout the Starts data if it exceeds last year's level? Will they reported a potential highest level of completions since 2008 if we exceed 105,000 units completed? Will they say "Best September Units Sold since 2008" if the units exceed 44,000 units? What will they say about higher levels of sales or higher sales prices? New home sales spur other types of sales and fuel the economy.


It's the economy.