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New US home sales race to six-year high in August; Sales jumped 18.0 percent to a seasonally adjusted annual rate of 504,000 units
Topic Started: 25 Sep 2014, 12:45 PM (521 Views)
Mike
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http://www.gmanetwork.com/news/story/380729/economy/business/us-economy-new-home-sales-race-to-six-year-high-in-august

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WASHINGTON - Sales of new US single-family homes surged in August and hit their highest level in more than six years, offering confirmation that the housing recovery remains on course.


The Commerce Department said on Wednesday sales jumped 18.0 percent to a seasonally adjusted annual rate of 504,000 units. That was the highest level since May 2008 and marked the second straight month of gains.



July's sales were revised to show a 1.9 percent gain instead of the previously reported 2.4 percent drop.



Economists polled by Reuters had forecast new home sales rising to only a 430,000-unit pace last month.



While the new home sales segment accounts for only 9.1 percent of the housing market, the increase last month should allay fears of renewed housing weakness after a surprise decline in home resales last month.



A survey last week showed homebuilder sentiment hit its highest level in nearly nine years in September, with builders reporting a sharp pick-up in buyer traffic.



In August, new home sales soared 50 percent in the West to their highest level since January 2008.



Sales in the populous South increased 7.8 percent to their highest level in 10 months. In the Northeast, sales rose 29.2 percent, but were flat in the Midwest.



Despite the rise in sales, the stock of new houses hit its highest level in four years. At August's sales pace it would take 4.8 months to clear the supply of houses on the market. That compared to 5.6 months in July.



Six months' supply is normally considered a healthy balance between supply and demand


Very strong result.

Edited by Mike, 25 Sep 2014, 12:47 PM.
http://mike-globaleconomy.blogspot.com.au/
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miw
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Mike
25 Sep 2014, 12:45 PM
Very strong result.
It's very interesting to see new home sales booming while transactions of existing homes tanked over the last couple of months.

My guess is that the investors that have been buying up thousands of homes for cash now think the market is getting a bit too rich and have stopped buying. If that is the case, then the question becomes what will they do with all those dwellings? Will they be held for the long term in these new residential rental REITs, or will the REITs be unwound when prices rise up again?
The truth will set you free. But first, it will piss you off.
--Gloria Steinem
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Mike
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miw
25 Sep 2014, 06:41 PM
It's very interesting to see new home sales booming while transactions of existing homes tanked over the last couple of months.

My guess is that the investors that have been buying up thousands of homes for cash now think the market is getting a bit too rich and have stopped buying. If that is the case, then the question becomes what will they do with all those dwellings? Will they be held for the long term in these new residential rental REITs, or will the REITs be unwound when prices rise up again?
Could also be the established house sales data will be revised up in the comming months which would fit with alot of the other strong indicators in the economy.

New homes could be getting a boost as most consumers would expect to see rising interests rates in the next 12 months, why not get in now and lock in a low rate for the next 15-30 years as most US mortgages tend to be fixed for long durations.

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szokolay
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Mike
25 Sep 2014, 07:13 PM
Could also be the established house sales data will be revised up in the comming months which would fit with alot of the other strong indicators in the economy.
More likely revised down. The reporting there has been well behind the curve as far as bearish results is concerned. It's all about confidence, the whole financial world is one big confidence game now.
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b_b
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Most of the growth in one region (albeit a large region, the west). So not a broad result. Hard to get too bullish on this report.

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peter fraser
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b_b
25 Sep 2014, 09:06 PM
Most of the growth in one region (albeit a large region, the west). So not a broad result. Hard to get too bullish on this report.

The more wealthy are building, but for the rest affordability has maxed out and rates rose marginally.

The USA needs wage rises for the workers.
Any expressed market opinion is my own and is not to be taken as financial advice
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Mike
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peter fraser
25 Sep 2014, 09:21 PM
The more wealthy are building, but for the rest affordability has maxed out and rates rose marginally.

The USA needs wage rises for the workers.
For that unemployment needs to keep falling, once they start hiting a rate with a 5 in front of it, they may begin to build wages pressure as competition for skilled workers increases.
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szokolay
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The US unemployment rate is one of their most manipulated statitistics unfortunately, and we usually only get the headline measure.
Here is a good primer on it, the punch line though,
Quote:
 
In August 2014, the real unemployment rate (U-6) was 12.0%, nearly double the widely-reported unemployment rate (U-3) of 6.1%.

http://useconomy.about.com/od/suppl1/f/real_unemployment_rate.htm
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b_b
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szokolay
25 Sep 2014, 09:40 PM
The US unemployment rate is one of their most manipulated statitistics unfortunately, and we usually only get the headline measure.
Here is a good primer on it, the punch line though,

http://useconomy.about.com/od/suppl1/f/real_unemployment_rate.htm
Yep.

To be fair, not really manipulated. Bls reports the number. Fed also takes it into account, which is why all of the "rate increase" forecasts have been hopelessly wrong for the past two years.
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