New home supply shows this housing market has stabilized

Today the Census Bureau reported new home sales came in as a beat of estimates at 800,000 and monthly supply of new homes broke under six months. However, the revisions were unfavorable, which should be noted since month-to-month data for new home sales can be wild and the revisions are a key trend to follow. However, the recent jump in the HMI data (builder confidence) can be attributed to a stabilization in the monthly supply data and a recent uptick in demand.

Census reported that “Sales of new single‐family houses in September 2021 were at a seasonally adjusted annual rate of 800,000, according to estimates released jointly today by the U.S. Census Bureau and the Department of Housing and Urban Development. This is 14.0 percent (±17.9 percent)* above the revised August rate of 702,000, but is 17.6 percent (±12.1 percent) below the September 2020 estimate of 971,000.”

Just to remind everyone, the year-over-year comps on all housing data should contain an asterisk because the make-up demand surge we saw toward the end of the last year created unrealistic comps. I knew some extreme YouTube fanatical housing crash bears would use the negative year-over-year data in purchase applications to promote a housing crash premise. This was why early in 2021, I wrote an article that said to expect that purchase application data would be negative but not overreact.