The real estate market is an integral part of the economy. It could be argued that the housing market created the Great Recession - Soaring prices, leveraged purchases, and the Ike Spike in gasoline prices all contributed to a crashing new home sales market and a crash in the existing home sales market. The drop in housing slowed the retail sector which slowed the jobs market, which slowed the housing market. A vicious cycle was created. A virtuous cycle has been created during the past year as jobs beget house sales that beget retail sales that beget more hiring. We have already received some good news this week regarding new construction and existing home sales. We have a dearth of inventory in new and existing homes for sale. The November Real Estate Forecast article projected a surge in new home sales and a surge in the average November sales price for new homes. Over 50,000 units sold and a potential record Average Sales Price for November, possibly all-time. What happened?
Best November Units Sold in over a decade - 52,000 units. Last November only 40,000units were sold. Last year the average sales price dropped from the 2015 record level. This November we surged beyond the November 2016 level and eclipsed the November 2015 level.
We have sold more new homes through November this year than all of last year. We have sold 570,000 units through November. We sold 561,000 during all of 2016. We have sold 48,000 more units through November of this year than November of last year. This means that 620,000 units is within reach. Builders will want to close on homes before the end of the year. Buyers will want to close on homes by the end of the year. we are trending right between 1983 and 1992 for end of year sales. The Rolling Year sales is at 609,000 units. The Current year pace is greater than the rolling year base so the sales are expanding. We are still lagging behind the 1993 level for November. We have a long way to go before we hit the 2005 level of sales. That may be a good thing. The expansion can continue.
Inventory is lagging, again. There are few than 300,000 units for sale right now. This is important. We have fewer units for sale than during November 1993 and November 2001. We have fewer homes for sale than during November 2007 as the economy was cooling.
The data for August, September and October were revised. The average sales prices were revised lower, the inventory revised higher, and the annualized rate of sale was massively lowered, only to have this month jump over 700,000 units. We might be happy if the units sold eclipse 1993 and hit 655,000 units.
The new home sales data is important. New home sales normally mean new appliances, new electronics, new furniture, and new jobs related to appliances, electronics, furniture and construction. The data is being ignored because the people reporting the news want to focus on the negatives. If it bleeds it leads. The "Russiagate" investigation. The "Armageddon Tax Reforms" that scares Democrats because it could add another $1.5 trillion to the debt over the next 10 years after adding $10T over a period of eight years under President Obama. Lower taxes mean more money to spend. Companies are giving employees end of the year bonuses. More spending. Another boost to the rocking economy. The housing market was a major reason why we had the recession. This expansion is the reason why we should continue to see further expansion. This was a good week for Real Estate data. Be happy. It's the Economy.
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