What are New Home Sales?
New Home Sales, or ’new residential sales,’ are critical economic indicators providing monthly insights into the volume of newly built homes sold. These metrics, published by the U.S. Census Bureau, paint a vivid picture of the housing market’s health.
Key Takeaways
- New Home Sales measure the sales of newly built homes each month.
- These sales figures offer investors clues about broader economic movements, making them a closely watched metric despite their lagging nature.
- Data for New Home Sales is driven by factors like household income, unemployment rates, and interest rates.
Deciphering New Home Sales
Investors and analysts keep a keen eye on New Home Sales as they reflect demand in the real estate market. Factors influencing these sales include household income, unemployment, and interest rates.
The U.S. Census Bureau offers both seasonally adjusted and non-adjusted figures. Adjusted numbers account for seasonal variables (e.g., weather) and present an annual total, while the non-adjusted figures provide monthly regional and national totals. These figures can help predict larger economic trends, such as potential recessions or recoveries.
Data Collection:
- Surveys of home-builders and U.S. Census Bureau’s Survey of Construction
- Building permits for new construction projects
A new home is counted in the measure if a purchase deposit is paid or a contract is signed during or after the year of construction.
Adjustments for Seasonal Changes:
- Remove variables like weather and the business cycle to reveal underlying demand.
- Ongoing data refinements ensure avoiding anomalies in reported figures.
Given the sheer volume of transactions, statistical samples estimate New Home Sales. While efficient, these methods introduce a minor margin of error included in monthly reports.
Interpreting New Home Sales Data
Financial outlets often analyze New Home Sales data to inform market-watchers. For example, in July 2019, a significant increase in single-family home purchases was noted by major publications—a 7% increase following months of decline. Experts highlighted the demand for affordable starter homes, driven by low unemployment, rising household incomes, and attractive interest rates.
By understanding New Home Sales, you can gain valuable insights into the real estate market’s broader economic influence, empowering you with better economic forecasting and investment strategies.
Related Terms: housing market, mortgage rates, economic indicators, seasonal adjustment, absorption rate.
References
- U.S. Census Bureau. “New Residential Sales”.
- U.S. Census Bureau. “Residential Sales: Press Release FAQs”.
- U.S. Census Bureau. “New Residential Sales: How the Data are Collected”.
- Wall Street Journal. “U.S. New Home Sales Picked Up in June”.
