Reclaiming Common Sense

The Real Estate Tri-fecta: Remarkable New Construction Data - Strong Existing Home Sale Data - Outstanding New Home Sales Data


Last month we had seriously good new construction data, new home sales data, and existing home sales data. It wasn't bad news so it wasn't reported in most places. The same is true for what has already been reported for October:

  • "October New Construction Building Momentum" recorded October Starts and Units Under Construction and Completions greater than what was recorded during October 2007 through 2018, and that October Completions were the highest October level since 2008.
  • "Strong October Existing Home Sales" reported the record October Average Sales Price and the most October existing home sales since October 2006. Inventory did not fall as much as it could have fallen.

The New Construction data garnered some attention. The Existing Hoe Sales data barely created a ripple in the daily news pond. What was expected and what was recorded for the new home sales data this October?


New Home Sales  were expected to grow October to October, and possibly month to month.   The number of October sales last year were lower than anticipated, making this year an easy year to see comparable sales spike. The October to October data was leaning between 46,000 and 53,000. The same month spikes mean that 53,000 to 58,000 was a distinct possibility.Regarding the Average Sales Price (ASP,) A value of $384,000 is just as likely as a value of $394,000 or $404,000. We might be "surprised" with another $395,000 month. The main question, as with existing home sales, is what kind of inventory would we record? Inventory has been growing year over year since the bottom of the Great Recession.  Inventory was expected t0 grow 1% to 3% this month and 3% to 17% from last October. It was expected that inventory would  be recorded around 330,000 units, or roughly 3%.


New Home Sales spiked 32.56% from Last October's 43,000 units to 57,000. This is remarkable. This could be reported as the best October since October 2007. There are some in the media reporting it as a drop because last month was revised up to 57,000. Unchanged is reported as a drop.


Same Month sales have exceeded last year's values 9 out of 10 months this year. The only month where we did not have as many sales as last year was during May. New home sales normally peak during March, April, or May. August was higher than July. September was higher than August. Normally new home sales cool during the Fall. We have the potential for having 50,000 or more units sold each of the next two months.

Annualized sales spiked 31.60% from 557,000 units last October to 733,000 units this year. Annualized Sales are being reported as dropping elsewhere because last month the annualized rate of sales was reported at 738,000 units. The problem is that last month the annualized rate of sales was reported at 701,000 units.  We are up 4.5% from last month's advance value of 701,000.  The annualized rate of sales was just 727,000 units during October 2007.


The Average Sales Price dipped to $383,000. This is lower than the past two Octobers. There were more units sold this October compared to last October in the $150k-199k range and the $200k-299k range. There were fewer homes sold in the $300k-399k, and the $400k-499k price ranges. This will bring down the average sales price.


Inventory up Month to month, down October to October. Inventory was recorded at 327,000. Last month the inventory was 323,000 units and last October it was 335,000 units. The spikes in monthly sales have drawn down inventory. The level of completions have been strong this year so the level of sales should continue to remain strong through the end of the year.


Builder Confidence is High. The builder sentiment report was released last week. Sentiment is confidence. Last month the Sentiment was recorded at 71%. This month it was 70%. Some in the media (CNBC, Bloomberg, Marketwatch) will proclaim that confidence is waning. last November the sentiment was 60%. A 10% spike is impressive. It is also the highest November sentiment level since November 2004 when it was also recorded at 70%.


The upward revisions of last months annualized sales from 701,000 units to 738,000 units made this month's 733,000 annualized sales look "weak." We only had 557,000 annualized sales last October. That means that we are up 31.60%. Last October we only had 43,000 sales. This October 57,000 sales. That is a spike of 32.56%.


Battling the Mainstream Media Narratives. The media is confused as to how to spin the news. Same month sales have been this year. The spikes in the same month sales are pulling up the current year growth rate. Right now we are 9.35% ahead of where we were during October of 2018. Hear is a sampling of the news:

I could not find a story on CNN's website. If good data is not reported did it even happen?


Remember that all real estate is local. New home sales are dependent on community, school district, neighborhood, lot size, home size, upgrades, and other amenities. Existing home sales are based on more than location, location, location. Community, School district, neighborhood and amenities are also important to existing home sales. Condition and price are critical. Consult a local Realtor to find out what price ranges are hot, and which are not. If you have to sell your home to buy your next home then it is usually better to list your home first and "risk" two moves versus two mortgages. Consult your loan officer.

It's the Economy.