Data on home sales is one of the first places market watchers look when they’re trying to gauge the health of middle-class America. And when the health of middle-class America starts to dip, it’s a huge red flag as to where the rest of the economy might be heading.
So when we get new home sale data that indicates home sales are crashing despite the lowest home prices in years, it’s more than a little unsettling.
Unfortunately, that’s what just happened. Zero Hedge reports that new home sales are tanking, while home prices themselves are at their lowest in over 2 years:
Following July’s exuberant spike, August saw new home sales tumbled 7.6% MoM (better than expected 8.3% drop) catching down to Existing and Pending Home Sales (and Housing Starts) plunge. Perhaps more problematic, the median new home price slipped to $284k, its lowest since September 2014.
Spot the odd one out…
As Home prices tumble…
The median sales price decreased 5.4 percent from August 2015 to $284,000.
Purchases fell in three of four regions, including a 12.3 percent slump in the South, the area that makes up the bulk of nationwide sales. Purchases declined 2.4 percent in the Midwest, and climbed 8 percent in the West to the highest level since September 2007.
The supply of homes at the current sales rate rose to 4.6 months from 4.2 months in the prior month. There were 235,000 new houses on the market at the end of August.
Probably a good time to hike interest rates…
What are the wider implications of this trend in real estate? Do you think there’s more than meets the eye? Give us your analysis in the comments.