November 27, 2017 – New single-family home sales represent the number of brand new houses that were purchased or committed to being purchased over the course of a month. This indicator has a trickle-down effect as demand rises for durable goods and consumer spending increases, boosting GDP. It is also a sign of strength in the consumer balance sheet to make the investment.
New home sales increased 6.2% in October to a 685,000 annualized rate, well above September’s downward revision to 645,000. This was also well above the consensus of 620,000. The median price dropped to $312,800 and year-over-year prices are up 3.3%. Sales rose in all regions in October. The months’ supply of new homes is at 4.9 months.
The Northeast region was a main contributor to the increase in new home sales making up 30.2% followed by the Midwest with a 17.9% increase. Even though a new home does not have to be completed to be considered a “sale”, if a deposit or agreement has taken place to build a house it is considered a sale. This could mean people are just receiving permits or putting a down payment down and building hasn’t even began to stimulate the economy. New homes being built translates into building materials as well as retail home goods boosting the economy.