The Census Bureau reported today that sales new homes in the U.S. (seasonally adjusted at an annual rate) plunged sharply in March to 481,000 after hitting a seven-year record level of 543,000 in February.
As has been the case so often, AP reporter Josh Boak didn't look past the seasonally adjusted numbers, and as a result gave the "expert" he quoted a free pass to supply sunnyside-up commentary in his mid-day Wednesday dispatch. He also shakily claimed that "winter storms" were a "likely" major impediment to March sales (bolds are mine):
US NEW-HOME SALES COLLAPSE IN MARCH
Sales of new U.S. homes plummeted in March, as the spring buying season opened with sharp declines in the Northeast and South.
The Commerce Department said Thursday that new-home sales fell 11.4 percent last month to a seasonally adjusted annual rate of 481,000. This marks a swift reversal from an annual sales pace of 543,000 in February, which had been the strongest performance in seven years.
Purchases of new homes have been volatile on a monthly basis, although sales during the first quarter of 2015 are higher than in 2014. The volatility points to a real estate market still finding its footing in the aftermath of the housing bubble that triggered the Great Recession in 2007 and the weak recovery that has followed.
"The pace is sluggish, but the trend in new home sales is still higher, said Jennifer Lee, a senior economist at BMO Capital Markets. "Don't be surprised to see a bounce back in April."
... Winter storms in January and February closed construction sites and likely pushed back potential March sales to later in the year. At the same time, a yearlong hiring spree coupled with low mortgage rates has expanded the number of people shopping for a home.
Boak's claim that March's "collapse" was a one-off "likely" due to weather is suspect.
Clearly, storms earlier this winter would have affected March new-home sales in the Northeast; however, that region only accounts for 7 percent of all such U.S. sales. Other regions were, overall, not nearly as severely affected by this year's somewhat harsh weather.
As to Jennifer Lee's "bounce back" speculation above, it has to overcome a very significant problem seen at the bureau's not seasonally adjusted (i.e., actual) sales table:
Since such records began being kept in 1963, actual March new-home sales have always been greater than actual February sales, with one exception: 1980, in the midst of Jimmy Carter's especially horrid, high-inflation, high-interest rate recession.
As seen above, even as the market was collapsing in 2008 and 2009, actual March sales topped February. But pending possible revision, it didn't happen in 2015.
What's more, in years during which March sales were the same as February's or only 1,000 units higher, new-home sales during the subsequent spring and summer were quite unimpressive.
Maybe Jennifer Lee is right that there will be a "bounce back," but it seems, based on past history, that we should be "surprised" if that rebound actually occurs.
The AP's Boak also reminded readers that unemployment is low, that millions more Americans are working, and that "hiring has increased the number of paychecks in the economy." But one word is notably missing from his report: "income." Unless the job gains are in permanent, well-paying full-time jobs, it doesn't seem reasonable to expect that a significantly greater number of Americans will be hunting for a brand-new home this year.
Cross-posted at BizzyBlog.com.
