{"id":1670,"date":"2020-02-26T11:41:13","date_gmt":"2020-02-26T16:41:13","guid":{"rendered":"https:\/\/naroffeconomics.com\/?p=1670"},"modified":"2020-02-26T11:41:13","modified_gmt":"2020-02-26T16:41:13","slug":"january-new-home-sales-3","status":"publish","type":"post","link":"https:\/\/naroffeconomics.com\/?p=1670","title":{"rendered":"January New Home Sales"},"content":{"rendered":"\n

KEY DATA:<\/strong>  Sales: +7.9%; Over-Year: +18.6%; Prices\n(Over-Year): +14.0% <\/p>\n\n\n\n

IN A\nNUTSHELL:<\/strong>  \u201cThe warm weather has really heated up the\nhousing market.\u201d<\/em><\/strong><\/p>\n\n\n\n

WHAT IT\nMEANS:<\/strong>  Some may call climate change a hoax, but to\nbuilders, it is the greatest thing since sliced bread.  In January, new home sales skyrocketed to\ntheir highest level since July 2007.<\/em><\/strong> \nDemand surged in the Midwest and West, was up solidly in the Northeast\nbut fell in the South.  But\nonce again, you have to look at the numbers with some caution.<\/em><\/strong>  First of all, the gains over the year were\nclearly impacted by the extremely warm weather. \nThe increases from January 2019 to January 2020 in the Northeast,\nMidwest and West were all between 45% and 50%. \nReally, does anyone believe that weather didn\u2019t play a huge part in\nthose surges?<\/em><\/strong>  When there is\nlittle snow and the cold weather isn\u2019t so cold, people can visit the\nconstruction sites and builders can build so it is a lot easier to sell homes\nunder construction.  Prices jumped as a\ngreater proportion of sales were for homes above $400,000.<\/p>\n\n\n\n

MARKETS AND\nFED POLICY IMPLICATIONS:<\/strong> What worries me about the apparent\nexuberance in the housing market is that the demand is likely being pulled\nforward because of the weather.  The\noutsized gains from the previous year for so many indicators are warnings that\nthe strength may not be sustainable. \nThus, while first quarter growth might be hyped by strong housing\nconstruction, it could be matched by a major turnaround in the spring and\nsummer.<\/em><\/strong>  And if builders do what\nthey often do, which is assume the good times are here to stay, then we could\nrun into some real problems in the sector as we go through the second half of\nthe year.  With the level of supply, as\nmeasured by months, low, I would not be surprised if builders continue to ramp\nup starts.  February has been another\nwarm month and the construction data should be really good.  I just worry that the sector could be getting\nahead of itself.<\/em><\/strong>  As\nfor investors, the story remains the coronavirus.<\/em><\/strong> It is not clear how\nlong it will take for a vaccine to be developed and become universally\navailable.  The estimates I have heard\nrange up to a year or even longer.  The\nimplication is that this is not going away anytime soon and each time a new outbreak\noccurs, expect the markets to react strongly.<\/em><\/strong>  Thus, the efficient but often irrational\nmarkets could be volatile for quite a while. \nThe Fed is likely to continue to put out the word that it needs to\nwatch and wait, not react.  Since\ninterest rate changes don\u2019t impact the physical health of the world, that makes\nsense.  As for the mental health of\ninvestors, well the Fed found the placebo effect worked well last year so it\njust might try it again this year.  <\/em><\/strong><\/p>\n","protected":false},"excerpt":{"rendered":"

KEY DATA:  Sales: +7.9%; Over-Year: +18.6%; Prices (Over-Year): +14.0% IN A NUTSHELL:  \u201cThe warm weather has really heated up the housing market.\u201d WHAT IT MEANS:  Some may call climate change a hoax, but to builders, it is the greatest thing since sliced bread.  In January, new home sales skyrocketed to their highest level since July … Continue reading January New Home Sales<\/span> →<\/span><\/a><\/p>\n","protected":false},"author":2,"featured_media":0,"comment_status":"closed","ping_status":"closed","sticky":false,"template":"","format":"standard","meta":{"footnotes":""},"categories":[3,1],"tags":[],"class_list":["post-1670","post","type-post","status-publish","format-standard","hentry","category-economic-indicators","category-uncategorized"],"_links":{"self":[{"href":"https:\/\/naroffeconomics.com\/index.php?rest_route=\/wp\/v2\/posts\/1670","targetHints":{"allow":["GET"]}}],"collection":[{"href":"https:\/\/naroffeconomics.com\/index.php?rest_route=\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/naroffeconomics.com\/index.php?rest_route=\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/naroffeconomics.com\/index.php?rest_route=\/wp\/v2\/users\/2"}],"replies":[{"embeddable":true,"href":"https:\/\/naroffeconomics.com\/index.php?rest_route=%2Fwp%2Fv2%2Fcomments&post=1670"}],"version-history":[{"count":1,"href":"https:\/\/naroffeconomics.com\/index.php?rest_route=\/wp\/v2\/posts\/1670\/revisions"}],"predecessor-version":[{"id":1671,"href":"https:\/\/naroffeconomics.com\/index.php?rest_route=\/wp\/v2\/posts\/1670\/revisions\/1671"}],"wp:attachment":[{"href":"https:\/\/naroffeconomics.com\/index.php?rest_route=%2Fwp%2Fv2%2Fmedia&parent=1670"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/naroffeconomics.com\/index.php?rest_route=%2Fwp%2Fv2%2Fcategories&post=1670"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/naroffeconomics.com\/index.php?rest_route=%2Fwp%2Fv2%2Ftags&post=1670"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}