New Home Sales Up (but beware double digit monthly gains)
In the past, we have cautioned that double digit gains of new home sales are VERY unreliable monthly data points. (It is mostly due to the way the Builders self report their sales to Commerce).
Have a look at this analysis we did a few years ago: It turns out that whenever New Home Sales jump double digits, it usually reflects a mean reversion from the prior (or subsequent) month's reportage. Indeed, over the past 15 years of data, we found that a mean regression followed nearly every double digit monthly gains. Typically, the subsequent month's data was significantly lowered -- flat to negative in nearly every case:
New Homes Sales
|onth, Year||Double Digit Gain||Subsequent Month||Increase / Decrease|
|June 2003||10.7%||July 2003||(-2.1%)|
|December 2000||11.7%||January 2001||(-4.8%)|
|July 2000||11.9%||August 2000||(-4.4%)|
|November 1998||11.4%||December 1998||(-4.6%)|
|January 1998||10%||February 1998||(-0.7%)|
|March 1995||10.2%||April 1995||0.8%.|
|*February 1994;||10.82%||March 1994||8.89%|
|April 1993||16.45%||May 1993||(-10.70%)|
|September 1993;||12.56%||October 1993||(-3.03%)|
|January 1992||21.15%||February 1992||(-5.47%)|
*February 1994 was the one exception -- it was followed by strong March and April data -- but came after January 1994, which has the honor of being the very worst month ever in the history of the Census Construction data: Down -23.77%.
In other words, stick with the two or three month average.
New Residential Sales
Commerce Department Census Division
U.S. April new-home sales unexpectedly jump 16%
MarketWatch, 10:00 AM ET May 24, 2007
Home Sales Soar by Record Amount
Thursday May 24, 10:09 am ET
By Terence Hunt, AP White House Correspondent
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» Homes Sales Headed Up on Lower Prices from Businomics Blog
Home sales are way up, thanks to falling prices.: Looks like developers have finally decided to accept lower prices to get the houses moved: In addition to developers dumping inventory at fire-sale prices, this month's pattern is partially explained by [Read More]
Tracked on May 24, 2007 3:40:07 PM
“At a recent courthouse auction, a five-bedroom, four-bathroom 3,500 square foot house on Richfield Way that sold in July 2005 for $526,000 was offered by the bank for $295,000. There were no takers.”
Apologies for posting that quote twice but yowza, Sacramento is in a full on meltdown. If sales weren't up with 40+% price cuts I'd be worried about the apocalypse.
Posted by: KirkH | May 24, 2007 10:44:47 AM
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