Reclaiming Common Sense

September New Home Sales Out pace 2018 Year to Date

Uptick in  Units September Sales of 17.39% compared to Last September


The September new Construction Report was released this past week. The article "September Starts and Under Construction Surge" details how these two number bode well for future new home sales. That same article included projections for the September Existing Home Sales data and the September New Home Sales data. "September Existing Home Sales Record 3.9% Jump" details how the seasonally adjusted annual sales jumped to 5.38 million units, up 3.9% from last September's 5.180 million units. September only sales were up 7.4% from last year's 423,000 units to 452,000 units. What was recorded and what was reported?


The Number of Units sold was recorded at 54,000. It was projected that the number of units sold should have come in between 48,000 and 52,000 units. It was possible for it to range even further to 47,000 to 54,000 units. This is remarkable.  Current month sales have been better than the 2018 sales eight out of nine months.


The annualized rate of sales is at 701,000 units - up from last year's 607,000 units. Last September the annualized rate of sales was 607,000. This is an increase of 15.45%. Some in the media may be lamenting the drop in annualized sales from August when it was 706,000 or June when it was 729,000. You can see from the 2012-2019 histogram that new home sales normally peak during March. This means that the annualized rate of sales should decline from March onward. We had a rate of 693,000 units during March.


The Average Sales Price was recorded at $362,700. It was thought that the September Average Sales Price would come in between $392,000 and $397,000. There was an outside chance that the September Average Sales Price would shatter the $400,000 level, blow through the $410,000 level, and possibly hit $420,000. This dip in the average sales price could be due to a lack of sales in the upper end or an increase in sales at the lower end of the price ranges. New home builders may be attempting to fill the existing home inventory void with new homes at comparable prices.


Inventory was recorded at 325,000  units. Inventory was expected to grow month to month (from 328,000 units) and September to September (from 326,000 units.) The month to month growth was expected to render a value between 336,000 and 339,000 while the September annual growth rate was leaning towards 346,000 to 378,000 units. Overall it was expected that inventory would remain under 350,000 units.


We had struggled to get inventory since April 2009. We had been over 300,000 units in inventory between May 2001 and April 2009. It was under 300,000 units between May 2009 and May 2018. We cannot sell non-existent inventory.


We are on-track for our best sales year since 2007. The pre-recession peak for sales was during 2006. The peak pre-recession sales price was during 2006. We are on-track with the sales volume recorded during 1988 and 1989, or roughly 665,000 units by the end of December.


The media is reporting this as a disappointing report. They appear to be reporting on the report and not the data. Some got it right. Some got it very WRONG.

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Were they outright wrong? No. These were more errors of omission rather than errors of commission. The glass was more than half full and they reported it as disappointing.


There were some other headlines that could have come from the data:

  • Sales of homes under $150k doubles (2k versus 1k)
  • September sales of homes $400k-$499k cut in half (18k to 8k)
  • September Sales for home $300k-$399k up 13.6% (25k v 22k)


My point is that we have a responsibility to report on the data, not just the report. If sales tend to decline during September, disclose it. If we have beat monthly sales eight out of nine months this year compared to last year, say it. If this is the best sales year since 2007, say it.


Don't even get me started on the remarkable weekly unemployment claims data.


It's the Economy.