Link to the New Home Sales Report:
New Residential Sales Index
Text from video:
New Home Sales
The New Home Sales Report monitors the number of new homes sold in the US.
The New Home Sales Report is issued monthly by the Census Bureau. I’ll post a link for the report in the text next to the video.
This report is similar to the Existing Homes report. However, instead of homes being counted after the sale closes, in this report homes are counted when the contract for purchase is signed.
Economists look at new home sales to gauge turning points in the economy. While new homes are only about 15-20% of the total quantity of homes purchased each month, new home sales and construction generate a lot of jobs, spending, and investment.
Typically only about 25% of all new homes sold are already built. About half of the remaining 75% are sold before the home construction has begun, and the other half are sold during the construction phase.
This makes the New Homes Report and excellent leading indicator for many sectors.
The report contains is a very short summary, and 3 tables.
The first table shows the number of new homes that have sold, as well as the number of new homes for sale. The second table shows the number of new houses sold by sales price;
and the third table shows the number of homes sold and for sale by stage of construction.
Looking at Table 1:
The numbers shown are in “thousand houses” and are reported as an annualized number. In other words, the numbers, multiplied by a thousand, show what the change would be for the whole year if the same amount of change remained consistent all year long.
On the upper left section is the seasonally adjusted number of new homes sold per month for the entire US.
Next to that is the number of homes sold in just the Northeast, the Midwest, the South, and the West.
Below this is the percent change from the previous month as well as the precent change from the previous year.
The main statistics reported in the media are the number of New Homes sold in the present month, and the percent change from the previous month.
The upper middle section shows the seasonally adjusted number of homes for sale.
In the column to the right is the seasonally adjusted Month’s Supply.
At the bottom of that column is the percent change from the previous month and the percent change from the previous year for both of these sections.
When the number of homes for sale increases, in other words, there is more supply, prices typically decrease. When the number of homes for sale decrease, in other words, there is less supply, prices typically increase
The bottom half of the table contains non-seasonally adjusted data.
In the left column is the total number of new homes sold in each of the previous 2 years in the entire US.
Next to that is the number of homes sold in just the Northeast, the Midwest, the South, and the West.
Below that is the total number new homes sold those years up to the equilent date in the present year.
Below that is the Year to Date Percent Change. This shows how the present year compares to the same amount of time in the previous two years.
In other words, if this report covers the first three months of the present year, these two rows show the number of new homes sold in the first three months for each of the two previous years.
Below that is the number of homes sold each month for the last 12 months.
The lower middle section shows the non-seasonally adjusted number of homes for sale for the entire country, as well as just the Northeast, the Midwest, the South, and the West.
The column to the right of that shows the non-seasonally adjusted month’s supply of homes presently
for sale.
When the number of months supply increases, it suggests that demand is down, and new home construction may be scaled back. When the number of month’s supply decreases, it suggests that demand is up and new home construction will increase.
Next to that are two columns that show both the median sales price and the average sales price for the each of the previous two years, as well as each of the previous 12 months.
Economists will watch the change in home prices to compare the change to inflation rates.
Also on this table are a couple of things called Relative Standard Error and 90% Confidence Interval. These have to do with accuracy and errors in the data taking.
Table 2 breaks down the home sales by sales price.
The top half of the table shows the quantity of homes sold for each price range.
The bottom half of the table displays the quantity for each price range as a percent of overall homes sold.
Table 3 shows the number of new homes sold and for sale by stage of construction.
The left section shows the non-seasonally adjusted total number of homes sold from Table 1.
Then these sales are broken down
Remember that homes are paid for when the home is built and the sale closes. Economists use this section to gauge when possible changes in revenue may occur in different sectors.
The right section shows the total number of homes for sale, and then the number of homes for sale that construction has not started on yet, and the number of homes under construction. Economists use this to judge whether the level of supply of homes is increasing or decreasing.
The far right column shows the median number of months completed homes have been on the market.
When the length of time homes on the market increase, it shows that either demand is decreasing, or the supply of homes is increasing. This suggests that either home prices will decline, home construction will decline, or both.
So that’s the New Home Sales report. Combined with the Existing Home Sales report and the Pending Home Sales Index, these three reports show the level of home sales in the US.
Music:
Existing Home Sales:
Danse Macabre – Low Strings Finale (Theme)
Exotic Battle
Machinations
Monkoto
Heavy Interlude
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