Tuesday, May 24, 2016

2.9 cheers for new home sales!

 - by New Deal democrat

As you probably already know, April new home sales blew out to the upside, making a new 8 year high at 619,000 annualized.  *If this holds up,* it is very important positive economic news, since new home sales tend to peak even before housing permits, so much so that they are more of a mid-cycle indicator than a long leading indicator!  In fact, it would be the single most positive news of the year to date.  Here's the updated graph from Calculated Risk:

But that *if* is very important.  New home sales tends to have upside or downside outliers once or twice a year.  And large revisions to those outliers are the norm.  For example, August 2014 was originally reported at 504,000, but the next month was revised down to 466,000.

So it remains a significant possibility that this months blowout number will be revised down, and yes possibly as much as 70,000, which would put it under February 2015's previous high.

So, 2.9 cheers!  Subject to revision.