New Home Sales were expected to show an improvement in inventory, a sold sales level, and an increase in the average sales price.
New Home construction is needed to generate new home sales. Existing home sales are the largest part of the real estate market. This year we have seen some of the best New Home under construction data, new home completions data and new home sales data since 2007, year to date. Existing home inventory is starting to improve on units sold and inventory. What can we expect this June?
New Home Sales grew June to June. The month to month data pointed towards 56,000 to 61,000 units sold. The June to June indicated that we should have expected 54,000 to 59,000 units sold. We saw 57,000 units sold, more than June of 2018 and June 2017. This was slightly lower than the revised 58,000 units sold during May 2019.
Units sold were better every this month this year than last year, except during May. This is being ignored. The year to date sales stand at 353,000 units compared to 347,000 units sold year to date during 2018. This is the highest level since 2007. More units have been sold year to date than during 2008-2018.
We almost set a June New Home Average Sales Price Record. The month to month data indicated an average sales price between $365,000 and $392,000. The June to June data is pointed between $373,000 and $388,000. It was thought that a number between $374,900 and $384,900 was reasonable. We saw an average sales price of $368,600, slightly lower than the all-time June record of $370,500.
New Home Inventory has been rising to healthy levels during the past year. A healthy level is between 300,000 and 350,000 units. Last year we were at 308,000. This past May we were at 332,000. The month to month data was leaning towards inventory of between 338,000 and 342,000 while the June to June data was leaning toward 335,000 to 345,000. Inventory should have risen to roughly 340,000 units. The Inventory number was can in at 336,000, up from the June 2018 level of 308,000. This is slightly off the January 2019 peak of 349,000 units.
The Great Recession was Four Recessions in one. The article "When did Great the Recession End" details the Housing recession, the jobs recession, the retail recession, and the overall recession. The retail recession ended during 2010. The jobs recession ended during February 2018. The Housing recession is still in recovery mode, except for Average Sales Price.
We are not in a recession. "All recessions" are jobs recessions. Unemployment is still trending lower year of year. Jobs are still rising year over year. We still have record levels of Job Openings. Inflation is low. Participation is improving. Retail sales are still on track for another record year. The inverted yield curve is being created by negative long-term bond rates in the European Union. If you can invest in the US and get positive yields versus the EU and negative yields, which would you do? As investors buy more bonds the demand drives prices up and yields down.
Are you waiting for a rate cut? We were told to anticipate three rate hies during 2018 and two during 2019. Then we were told to expect four and one. Then some mental midget proposed a possible fifth rate hike during the government shutdown. The current discussion is a single rate cut either during July or September. Now another mental giant is saying that we should anticipate twp, three, four, or five rate cuts during the next two years. No. We should get one cut, possibly this month, to calm markets and to "dis-invert" the yield. We might then get one more rate HIKE by the end of the year in order o have some room to cut if the economy slows. The Federal Reserve is the US Federal Reserve, not the International Monetary Fund. We can only work with what is happening in the US economy. We must lead by example. If you are waiting to ht a lower mortgage rate, don't. The interest rates were at 10% during 1990 and dropped roughly 1% a year until 1995. When interest rates dropped below 7% people were gobsmacked. It was cheap money at 6%. It was a dream come true at 5%. Eventually interest rates will hit 5% again. Contact your REALTOR and your loan officer.
All real estate is local. This data discussed in this column has been non-seasonally adjusted national data. The headline numbers will be seasonally adjusted. The things that determine sales prices are location, condition, amenities, and the motivation of the buyers and the sellers. Prices are impacted by the state, county or parish, municipality, school district, neighborhood or condominium association, and style of home. Some years neighborhoods or price ranges are hot and then cold the following year. Sometimes there is an under-supply during June and an oversupply during May.
The new home construction data, new home sales data, and existing home sales data are pointing to improving conditions - not to hot, not cold. Slow and steady will win the race.
It's the Economy.
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