Reclaiming Common Sense

The New Home Construction numbers were very good last week.  We had the best March starts since 2008. the under construction level was over 1 million units, only slower than March 2003, 2004, 2005, 2006 and 2007. We have seen steady improvement in the construction data for months. We have seen consistent improvement in new construction sales, as well. We saw continued improvement in February Units sold and the February Average Sales Price. We also saw improvement in the January New Home Sales Numbers. The average sales price edged down from the January 2016 level while the units sold edged up from January 2016.  How did we do this past month for units sold and sales price? How are we doing on a rolling year perspective? How are we doing on a rolling year basis?

The Best March units sold since 2007 - Highest Ever March Average Sales Price. The data sounds great until you realize that we saw more units sold during the month of march every March between 1993 and 2007. We had dismal units sold during 2008through 2015.This month we had virtually the same number of units sold as were sold during march 1983. This means that we have a long way to go until we hit the volume seen during 1997-2005.

We are starting the year with lower units sold than 1996 through 2007. The running year total, the past twelve months, we have sold 576,000 units. The pace of sales is improving. The current year data is mixed - we are seeing a pace similar to 1983 when we sold 622,000 units. We are starting at a slower pace than 1990 when we saw 535,000 units sold and slower than 1992 when 608,000 units sold. For comparison sake during 1985 we sold 639,000 units and during 1996 we sold 758,000 units.

The Headline of Annual Sales over 622,000 seems optimistic. We have not sold over 600,000 units since 2008. The revisions for the annual rate for December was 551,000 while it was 585,000 for January and 587,000 for February. The importance of this number cannot be understated. New construction provides new jobs, new jobs provide new retail sales, new retail sales provide new jobs which encourages people to buy new or existing homes. If people have homes, they often sell an existing home for a new home. We will have a better feeling of where the year will end as we approach July, August and September.

It's the economy.