August New Home Sales

The New Home Sales numbers are out for the month of August.  The New Home Sales number reflects the annualized number of new single-family homes that were sold in the previous month.  The forecast called for 292k of new home sales and the actual headline number was 288k, which obviously did not meet forecasts.   Junes actual headline number of 276k was revised to 288k, which makes Augusts number unchanged from June's (assuming the revision doesn't change it).  This is more of an indicator of economic health than existing home sales (in my book) as it also reflects employment opportunity (or lack of) due to the construction of new homes.  Existing home sales is more limited to benefiting the financial sector (and we all want to do that).

Figure 1

Lets be honest though, with the amount of inventory in the housing market, we really don't need more housing coming into the market further devaluating our home prices.  This is the problem with the constant growth machine.

Year-over-year (Aug2009-Aug2010) we see the Northeast had a relatively steady growth in new home sales suffering only a -5.71% dip YoY, the midwest was hit the hardest in new home sales with a -61.76% decline in new home sales, the West reduced by -50.70% and the South reduced by -39.18%.  The upside is in the areas reducing construction is that it helps hold current inventory prices up (not including foreclosures and short sales, which are pulling prices down everywhere).  The negative is that this impacts jobs in those regions of the country (re: plumbing, electrical, HVAC, construction, financing, utility and etc) potentially creating more foreclosures and short sales due to higher unemployment, not to mention the reduced anticipated state revenues from would be new homeowners.

Figure 2