- by New Deal democrat
Let me start out my look at this morning’s August new home sales report with my typical housing mantra:
Finally, here is the long term view of new home sales vs. new homes for sale, I.e., inventory (gold):
It’s easy to see that inventory only turns after sales do.
Now, here is the close up look of the past 5 years:
Inventory turned down earlier this year, and at the moment is stable at that lower level. Note that I do not make use of “month’s supply” of inventory in my analysis, because it is clear that it turns up or down only as a result of sales turning up or down.
In sum, August new home sales confirms that lower mortgage rates have caused sales to increase, prices appear to be beginning to follow, and inventory remains slightly reduced.
As per my “housing choke collar” thesis, any quick continued increase in prices is likely to feed into a slowdown in sales.