Tag Archives: New Home Sales

New Home Sales Miss As Mortgage Rate Collapse Fails To Bring Buyers Back

Despite yesterday’s disappointing existing home sales print, new home sales were expected to spike (after dropping for two straight months), and did – thanks to a large downward revision in May.

New Home Sales were 646k SAAR in June – missing expectations of 658k. However this 7.0% MoM jump was bigger than expected thanks to the 8.2% revised plunge in May.

May new-home sales were revised down to 604,000 from 626,000; March and April purchases were also revised lower.

Year-over-year, new home sales rebounded…

Purchases of new homes jumped in the West by the most since August 2010, while sales also rose in the South. Sales in the Midwest slumped to 56,000 last month, the slowest pace since September 2015.

The supply of homes at the current sales rate declined to 6.3 months from 6.7 months in May.

The median sales price was little changed from a year earlier at $310,400.

Despite a collapse in mortgage rates, new home sales refuse to accelerate…

Time for a Fed rate-cut then… because that has helped housing, right? Oh wait…

Source: ZeroHedge

New Home Sales Soar To 16-Month Highs As Price Plunges

New home sales were expected to retrace some of February’s gains but in a reversal of yesterday’s dismal drop in existing home sales, new home sales in March soared 4.5% higher MoM (and February was revised stronger from +4.9% MoM to +5.9% MoM).

This is the 3rd straight month of rising new home sales.

https://www.zerohedge.com/s3/files/inline-images/bfmF21A.jpg?itok=f4HyxKtq

The 692k SAAR is the highest since Nov 2017 – near the post-crisis highs.

The reason – among others – is simple – median new home prices plunged to their lowest since Feb 2017 (a 9.7% from a year earlier to a two-year low of $302,700)….

https://www.zerohedge.com/s3/files/inline-images/2019-04-23.png?itok=Ouo7e1vD

A mixed picture across regions with Northeast March new home sales plunging to 28K, down 22.2% from February, but Midwest surged from 74K to 87K, up 17.6%.

The supply of homes at the current sales rate decreased to six months from 6.3 months in February. The number of new homes for sale in the period was little changed at 344,000.

New-home purchases account for about 10 percent of the market and are calculated when contracts are signed. They are considered a timelier barometer than purchases of previously-owned homes, which are calculated when contracts close.

Let’s just hope the recent resurgence in mortgage rates doesn’t last…

https://www.zerohedge.com/s3/files/inline-images/bfmDB7B.jpg?itok=zHL-lBVs

Source: ZeroHedge

New Home Sales Slump In January, Despite Drop In Prices

Following a rebound in November and December, January’s (delayed due to the govt shutdown) new home sales plunged 6.9% MoM despite a jump in homebuilder sentiment.

https://www.zerohedge.com/s3/files/inline-images/2019-03-14_7-05-01.png?itok=z81jYHNO

This pushes year-over-year growth in new home sales back into decline.

https://www.zerohedge.com/s3/files/inline-images/2019-03-14_7-06-40.png?itok=iI2VJQa9

Sales of new U.S. homes in January fell to the weakest pace since October, driven by a decline in the Midwest as still-elevated prices keep buyers on the sidelines.

https://www.zerohedge.com/s3/files/inline-images/2019-03-14_7-01-56.png?itok=8wOcford

The number of properties sold for which construction hadn’t yet started declined to 183,000, the lowest in three months, showing a weaker pipeline of building for the coming months.

The sales drop occurred despite a drop in the median sales price, down 3.8% from a year earlier to $317,200.

https://www.zerohedge.com/s3/files/inline-images/2019-03-14_7-12-07.png?itok=8Te0gwF0

As a reminder, new-home purchases are seen as a timelier barometer of the market, as they’re calculated when contracts are signed rather than when they close, like the previously-owned homes data.

Source: ZeroHedge

Desperate Home Builders Offering $100,000 Discounts, Free Vacations Amid Cooling Market

As US home sales begin to cool off, homebuilders have begun to panic – offering price cuts of more than $100,000 along with free upgrades such as media rooms, cabinets and blinds – reports Bloomberg

https://www.zerohedge.com/sites/default/files/inline-images/price%20reduced.jpg?itok=9-FrnmTFThat’s not all, real estate brokers are being enticed with free vacations such as trips to Lake Tahoe, Santa Barbara, Cabo San Lucas and even a dude ranch in Wyoming – all in the hopes that they will steer buyers towards houses in slowing markets.

This generosity flows from increasingly desperate home builders. Hot markets are cooling fast as interest rates rise. In the great housing slowdown of 2018, shoppers are reclaiming the upper hand, after years of soaring prices that placed most inventory out of reach for many families. “Everybody is hungry for the buyers,” Konara says. –Bloomberg

https://www.zerohedge.com/sites/default/files/inline-images/nhsl.png?itok=nSkT70icBuilders are definitely feeling the heat right now, as new home purchases dropped in September to the weakest pace since December 2016. Meanwhile, previously owned home sales dropped for a sixth straight month – the worst streak since 2014, according to Bloomberg. Investors in home building stocks are also feeling the pain, as the sector has lost more than a third of its value this year. 

There are pockets of robust housing activity still, however – as rising wages have put more homes in reach; starter homes are still in demand, while some smaller and more affordable markets – such has Grand Rapids, MI and Columbus, Ohio remain strong. Still, the overall trend does not look good.

https://www.zerohedge.com/sites/default/files/inline-images/housing%20stocks.png?itok=kgzThkDS

On top of interest rates, sellers in some regions face added challenges. President Trump’s tax overhaul places caps on tax deduction for mortgage interest and property taxes, hurting high-tax regions such as New York’s suburbs. In Manhattan, added supply is about to hit the market, with 4,000 new condo units to be listed for sale in 2019, almost twice as many as this year, according to brokerage Corcoran Sunshine Marketing Group. –Bloomberg

Another factor hindering home sales, according to Bloomberg, are restrictions on immigration which have made high-skilled workers in places like San Jose and Austion hesitant to buy, while a strengthening dollar has made US investment properties less appealing to wealthy buyers in South America, and Chinese buyers snapping up homes up and down the West Coast. 

In Seattle, where home prices have doubled since 2012, builders are offering cash for customers to “buy down” mortgage rates—that is, pay to get a lower interest rate. “Builders are calling us,” says Andy McDonough, senior vice president at HomeStreet Bank, which works with the companies on such promotions. “They weren’t doing this earlier because buyers were lining up.” –Bloomberg

The shifting real estate tide is perhaps most noticeable in previously sizzling markets – such as Fricso, Texas. Located 30 miles north of Dallas and full of newly constructed master planned communities, its population nearly doubled over the past decade to 177,000, while its jump of 8% last year made it the fastest-growing city in America. 

https://www.zerohedge.com/sites/default/files/inline-images/house%20being%20built.jpg?itok=9o9Fj67pAll is not well in Frisco, however, as home sales have all but ground to a screeching halt. 

On a recent weekday, Konara, the real estate broker, drives his Dodge minivan along Highway 380, a builder battleground, where national giants such as Lennar, Toll Brothers, and PulteGroup go head to head with Texas companies. He stops at sales offices, where balloons festoon posts in a vain effort to spur sales. He points to empty houses that he says were completed six months ago.

His own sales are half what they were in 2016. In many cases, he’s rebating to customers all but $1,000 of his commission on each home sale. He walks into an Indian restaurant for lunch and looks up at the television screen. A competitor, the “Maximum Cash Back Realtor,” says he’ll take only $750. “You know what that means,” Konara says. “I’ll have to do the same.” –Bloomberg

Konara received a call from Raj Patel, a 35-year-old pharmacist with two young children. Weeks away from finalizing a purchase of a $699,000 new home with “four bedrooms, a grand staircase, two patios, a balcony, a game room, a media room, and a three-car garage,” the buyer is paying $90,000 less than the advertised price – and still has reservations considering that a builder in the same community is selling a similar house with the same “bells and whistles” for $75,000 less than that

https://www.zerohedge.com/sites/default/files/inline-images/rediuced%202.jpg?itok=Gy-s3HoL
Konara tells Patel “the market is getting soft,” to which the pharmacist replies “Hopefully the market doesn’t dip much more than this.” 

Nearby, Jennifer Johnson Clarke relaxes on a couch in the living room of a model home in Frisco. There’s a wet bar to her right, a 23-foot ceiling above and an indoor Juliet balcony. Not long ago, the $1.2 million house would have been a hot commodity. Clarke, director of sales for Shaddock Homes, a 50-year-old family-owned builder, will have to work harder to sell homes based on this model. –Bloomberg

“We have an oversupply. Too many lots came on the market in the last 12 to 16 months, and demand has fallen off a cliff,” says Clarke. “I’ve not offered incentives on any scale like I’ve offered this year.” 

Source: ZeroHedge

New Home Sales Tumble For 3rd Straight Month – Worst Streak In 4 Years

After a surprise rebound in existing home sales (even as condo sales slumped), new home sales were expected to rebound in Feb from their 7.8% plunge in January, but grossly disappointed, dropping 0.6% MoM – the 3rd monthly drop in a row.

This is the first time new home sales declined for 3 straight months since Q1 2014

https://www.zerohedge.com/sites/default/files/inline-images/2018-03-21_7-01-15.jpg?itok=zjRZfkOz

Single-family home sales increased 4.2 percent last month to an annual rate of 4.96 million. Purchases of condominium and co-op units declined 6.5 percent to a 580,000 pace (down 4.9% YoY – the worst since Sept 2014)

https://www.zerohedge.com/sites/default/files/inline-images/2018-03-21_7-10-21.jpg?itok=CYywDc_o

However, the inventory of available properties plunged 8.1% YoY to 1.59mm,  the lowest for February in data going back to 1999.

While purchases rose 11.4%MoM in The West, The NorthEast saw a 12.3% MoM plunge in sales (blamed on weather)

“There’s no letup in home-price growth, another testament to the solid, strong housing demand in the marketplace,” Lawrence Yun, NAR’s chief economist, said in a conference call with reporters.

“If prices were weakening that may be signaling a possible turning point but we are not really seeing that.” Inventory conditions remain “very tight,” he said.

However, it’s not been a pretty start to 2018 for US housing data as the Hurricane/Flood bump fades…

https://www.zerohedge.com/sites/default/files/inline-images/2018-03-21_6-58-17.jpg?itok=tbgA4FPkSource: ZeroHedge

Rising Mortgage Rates Smack New Home Sales Down 7.8% In January

  • Homebuyers increasingly can’t afford what they want.

  • Higher mortgage rates, combined with the loss of homeowner tax breaks in some of the nation’s most expensive markets, are taking away buying power.

  • New home sales were also down 9% in December

New home sales down 7.8% in JanuaryNew home sales down 7.8% in January, on top of being down 9% in December

Sales of newly built homes are falling, and the culprit is clear. Homebuyers increasingly can’t afford what they want. Higher mortgage rates, combined with the loss of homeowner tax breaks in some of the nation’s most expensive markets, are taking away buying power.

Sales fell in December, when the new tax law was signed, and then again in January, when mortgage rates moved higher. Sales are now at their lowest level since August of last year.

The government’s measure of new home sales is based on signed contracts during the month, reflecting the people who are out shopping and signing deals with builders. It is therefore a strong read on current reactions to home affordability. Mortgage rates moved a full quarter of a percentage point higher during January, from below 4 percent to about 4.25 percent. It then took off further from there.

“It seems that the jump in mortgage rates in January had an immediate impact on contract signings,” wrote Peter Boockvar, chief investment officer at Bleakley Advisory Group. “You can’t get more interest rate sensitive when it comes to homes and cars with the associated cost to finance.”

Higher home prices are adding to the difficulty for buyers. The median price of a newly built home rose to $323,000, a 2.5 percent gain compared with January 2017. Builders are not only increasing prices, but they are also mostly focused on the move-up market, not the entry level where homes are needed most.

While there is a severe shortage of existing homes for sale, the opposite appears to be the case in the new home market. Supply rose to the highest level in four years, another sign that new construction is increasingly out of financial reach for today’s home buyers.

“The drop in sales may be due to saturation in the upper price range of the market, which should compel builders to follow the market and build more moderately priced homes,” wrote Joseph Kirchner, senior economist at Realtor.com. “We may be beginning to see this with the largest drop for new home sales in homes priced above $500,000.”

The expectation had been for an increase in new home sales in January, after the sharp drop in December. Some economists argue that when rates begin to rise, there is an initial surge reaction from buyers who want to get in before rates increase even further. That did not happen, likely because affordability stood in the way.

Builders did note a drop in buyer traffic in January, according to a monthly sentiment survey from the National Association of Home Builders. That measure did not improve in February, when rates moved even higher. Builder confidence remains high, but largely due to sales expectations over the next six months, not current sales conditions or buyer traffic.

Builders may be counting on the tight supply in the existing home market to push more business their way. Sales of existing homes fell in January as well, with the blame laid squarely on a severe shortage of homes for sale.

“This report is undoubtedly disappointing. Like 2017, 2018 isn’t setting up to be particularly favorable for builders — construction materials and permitting costs are high and rising, labor is tight, and desirable, buildable land is scarce and expensive,” wrote Aaron Terrazas, senior economist at Zillow. “It seems clear that we shouldn’t expect a big breakthrough in new home sales any time soon, and should instead look for incremental progress at best. At this point, we’ll take whatever we can get.”

Source: Diana Olick | CNBC

New Home Sales Unexpectedly Dive Again

Don’t Blame Hurricanes

The Census Bureau reports New home sales are down again, with median prices weakening sharply.

Net sales revisions for June and July were negative. In addition, year-over-year sales are negative.

Sales were down in the South, the West, and Northeast, so don’t blame the hurricanes.

https://mishgea.files.wordpress.com/2017/09/new-home-sales-2017-09a.png

Economists Surprised Again

Economists were surprised by another month of weak new home sales.

The Econoday consensus estimate was 583,000 at a seasonally adjusted annualized rate (SAAR) but sales came in at 560,000 SAAR.

Weakness in the South pulled down new home sales in August as it did in last week’s existing home sales report. New home sales fell sharply in the month to a 560,000 annualized rate vs an upward revised rate of 580,000 in July and a downward revised 614,000 in June (revisions total a net minus 7,000).

Sales in the South, which is by far the largest region for housing, fell 4.7 percent in the month to a 307,000 rate for a year-on-year decline of 9.2 percent. But importantly, sales in the West and Northeast were also lower, down 2.6 and 2.7 percent respectively, with sales in the Midwest unchanged.

September, in fact, was a weak month for housing demand, evident in this report’s median price which fell a very sharp 6.2 percent to $300,200. Year-on-year, the median is up only 0.4 percent which, in another negative, is still ahead of sales where the yearly rate is minus 1.2 percent.

Builders, despite late month disruptions in the South, moved houses into the market, up 12,000 to 284,000 for a striking 17.8 percent yearly gain that hints at a glut. But supply had been so thin that the balance is now at a traditional level, at 6.1 months vs 5.7 and 5.3 months in the prior two months and 5.1 months a year ago.

Hurricane effects are likely in the next report for September with the South to continue to suffer. But today’s data do mark a shift, one of softening sales nationally, which is a short-term weakness, and a re-balancing in supply which is a long-term strength. Yet for the 2017 economy, the housing sector looks to be ending the year in weakness, some of it hurricane-related.

Expect downward revisions in GDP estimates for the third and fourth quarters.

By Mike “Mish” Shedlock | MishTalk.com