Markets & EconomyMortgage

Sales of new homes jump! … Right?

What the numbers from HUD and the U.S. Census Bureau mean
  • Sales of new homes are based on contracts written, not closed sales. The rate of cancellation is high and stupendously variable.
  • The figure to look for in each of these reports: the year-over-year. The big news in this report really is big, almost 24 percent ahead of 2015.
  • However, odd on its face: construction of multi-family homes (apartments and condos) is slowing almost as fast.

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In this week's screeching headlines: “Sales of New Homes Reach Eight-Year High, Point to Stronger Economy.” April did have a big month, maybe even a trend-changer, but this is an election year -- a crazy one -- and everything needs a second look. Why is it so hard to count housing? Housing is arguably the nation’s largest industry, yet suffers with some of the worst aggregate data. Sales of new homes released each month are the joint estimate produced by the U.S. Census Bureau and the Department of Housing and Urban Development (if you want anything done properly, make one person or entity responsible). Sales of new homes are based on contracts written, not closed sales. The rate of cancellation is high and stupendously variable. And not subsequently corrected. It takes many months to complete a home, but there will be no October revision of April’s report. The change in sales reported is from the prior month, then annualized. This newest report in actual numbers (...