Tuesday, April 25, 2023


 - by New Deal democrat

For the past few months I have speculated that home sales were bottoming. This morning’s report on March new home sales put an exclamation mark on that idea.

New home sales increased 57,000 in March (from a February level downwardly revised by -17,000) to 683,000 annualized (blue in the graph below). The increasing trend in sales from the bottom of 543,000 last July at this point seems crystal clear. As I have said many times, new home sales are very noisy, and very heavily revised, but frequently turn first. For confirmation, I use single family permits, which have very little noise and usually clear trends (red). And they are almost certainly confirming the trend from new home sales:

Since mortgage interest rates peaked last October, this is not surprising.

Meanwhile, just as we saw with the house price indexes earlier this morning, the median price of new homes increased slightly YoY for the second month in a row, now up +3.2% (gold, compared with the YoY% changes in new home sales, blue):

As is usual, prices have followed sales with a significant lag.

This is good news for the economy in 2024, as it tends to put a floor under any downturn later this year, suggesting that if there is a recession, it will be relatively brief and shallow (Fed permitting).