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New Homes Sales Is Less Important Than New Homes Closed

December 28, 2006 by Scott Kinne

Yesterday's New Home Sales report revealed the following signs of immense strength in the housing sector and mortgage rates are moving higher on the news.

  • Sales registered 1.047 million versus the expectation of 1.015 million — a difference of 3.15%.
  • Sales were revised higher by 46,000 over the past three months.
  • Inventory levels dropped to 6.3 months worth of supply from 6.7 months worth of supply.

The Fed has told us many times that a slowdown in the housing sector will lead to a slowdown in the overall economy. Only, it doesn't appear that housing is slowing down.

Or, is it?

According to the Wall Street Journal, contract cancellations for big builders are hovering at about 40%, twice last year's levels. Suddenly, New Home Sales doesn't seem so rosy. It doesn't matter that more homes go under contract if more contracts are cancelled, too.

Let this be one more lesson to look deeper than the headlines for clues about the economy.

Filed Under: Uncategorized

Scott Kinne

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Vice President, Senior Loan Officer
NMLS ID #182351
Office: 703.293.6146
Mobile: 571.237.6241
Fax: 571.317.2478
skinne@fhmtg.com

Licensed In Maryland, Virginia, Washington D.C., West Virginia
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