National Housing Market Outlook

Wrong Again—New Home Sales Actually Rose in January

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Rick Palacios Jr

February 28, 2018
Follow Rick on Twitter: @RickPalaciosJr

I suppose we should thank the Census Bureau for publishing incorrect conclusions and footnoting a 19%+/- margin of error. However, it gives our clients heartburn. Our clients pay us to be right—not to be overly bullish or bearish.

This week, the Census Bureau and HUD reported January new home sales fell both month over month and year over year.

Consider the following:

  • The press rarely notes that the data has +/- 19% month-over-month margin of error and +/-16% year over year. In other words, they don’t even know whether sales rose or fell last month. That’s not a statistic worth printing in our opinion.

  • Public home builders just reported a strong 4Q-17, with many noting even better results in January. We spend days combing through all the public home builder earnings calls each quarter, gleaning industry insight and local market intelligence in the process. Reading the comments below from this quarter, you’d be hard pressed to think new home sales fell off a cliff in January.

  • Toll Brothers: “Recall that the tax reform provisions were known in early to mid-December, but our buyers didn’t seem to blink. Contracts in January improved 21% year over year.”

  • TriPointe Group: “Regarding the beginning of 2018 and higher mortgage rates…the first 6 weeks of 1Q-18 we continue to see strong demand.”

  • Taylor Morrison: “We’ve seen momentum carry into the company’s strongest January yet with a pace of 2.5 [net sales per community] that accelerated throughout the month. The pace compares to 2.3 in January of 2017, almost a 10% increase on top of a nearly 24% increase last year.”

  • William Lyon Homes: “2018 selling season is off to a great start, with net new home orders in January demonstrating a healthy double-digit increase YOY.”

  • Beazer: “January was up YOY…the data into January has been very strong.”

In conclusion, home builders started off 2018 on a strong foot in January. For those of you who would like additional help separating housing noise from true signal, please reach out.

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About The Author

Rick Palacios Jr
Managing Principal, Director of Research
Rick oversees and guides JBREC’s research platform while coaching his team daily.

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