Data released on Monday showed an unexpected decline in New Home Sales in September. Analysts at Wells Fargo, point out sales for the prior month were revised lower, but they see sales are still solidly trending higher on a 3-month moving average basis, reflecting strong demand.
Key Quotes:
“New home sales fell slightly in September, registering one of the few downside surprises from the housing sector. Overall sales fell 3.5%, which easily reversed the prior month’s 3.0% gain. Expectations had called for sales to hold at their August level, which had initially shown new homes selling at a 1.011-million unit pace.”
“New home sales are notoriously volatile on a month-over-month basis and large revisions are not uncommon. This past month’s undershoot was relatively modest in that perspective, as was the revision. Sales are still trending high on a 3-month moving average basis.”
“While demand for new homes is quite strong, the pace of new home sales will likely remain close to its current level for some time. Mortgage applications have fallen slightly in recent weeks, despite the persistence of low mortgage rates.”
“New home sales are running 16.9% ahead of their year-ago pace, with the largest percentage gains coming from the Midwest (up 25.9%) and Northeast (up 22.5%).”
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