New home sales in February totaled 772k, 38k less than expected and January was revised down by 13k to 788k. Keep in mind that the average 30 yr mortgage rate in February according to Bankrate was about 4.10% vs 4.5% today and which compares with 3.55% in January.
Months’ supply did tick up to 6.3 from 6.1 and remains about the long-term average in stark contrast to the anemic level of existing homes for sale. This is important to keep an eye on because the supply of new homes has been rising notwithstanding all the supply pressures that is more so altering the timing of finishing the home, rather than starting one. In fact, the number of new homes for sale are at the highest level since August 2008 on the downside of that bubble.
The median home price, which jumps around a lot month to month because of the large influence of the mix, was $400,600, up 10.7% y/o/y. That is down from $427,400 and to the mix point, there was a pick up in the sale of homes priced between $200-400k and a decline for those priced above. The average price is now above $500k for the 1st time.
Bottom line, the lack of existing homes for sale and in the face of labor shortages and trouble procuring enough raw materials, appliances, garage doors, windows, etc…, builders have the largest amount of homes for sale in 14 years. As household formation is slowing to a crawl, and with now rising mortgage rates, hopefully, this leads to lower prices which would better position a 1st time buyer to purchase a home instead of having to rent where prices are rising double digits too. Take note of course if you are long homebuilders but I’m sure you already did because of the recent jump in mortgage rates. I’m not long any myself.
Chief Investment Officer
Bleakley Advisory Group
peter.boockvar -at- bleakleyadvisor -dot-com
Editor of The Boock Report