Decent New Home Sales Report

I wanted to touch on Friday’s report on new home sales. The numbers weren’t great, but they were good enough. This is probably better news for the economy than anything the yield curve says.

These figures are very noisy and they bump around a lot. It’s important to look at the overall trend.

The Commerce Department said Friday that new homes sold at a seasonally adjusted annual rate of 635,000 units. That’s down from a sharply revised upward rate of 728,000 in June. So far this year, sales have risen 4.1%, a sign that buyers are beginning to respond to lower mortgage rates.

The volatility in home sales reflects broader uncertainty in the housing market. Buyers have been eager to take advantage of wage growth and historically-low mortgage rates. The average rate on a 30-year loan declined to 3.55% this week, according to mortgage buyer Freddie Mac. The revisions to the June figure, coupled with a rebound in existing home sales in July according to data released by the National Association of Realtors, show sales reacting largely well to lower borrowing costs.

The mortgage market is helping. This year will probably be the best year for new home sales since 2007.

Don’t let negative news about the economy overwhelm you. There’s still a lot left in the current economic cycle.

Posted by on August 26th, 2019 at 11:43 am


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