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By New_Deal_democrat September 26, 2016 12:33 pm
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Single family home sales add evidence to uptrend in housing

Normally the most reliable indicator for the housing market is permits, because it tends to slightly lead starts, and is much less volatile.  Because of distortions in May and June 2015 all due to NYC, it has not been the case since then (although it should become more reliable again by next year, and the distorted YoY comparisons fade): 


New home sales have more often than not peaked before housing permits, but they too are more volatile and often heavily revised:

So this morning's report on new home sales is particularly helpful.  Yes it declined from July's post-recession record -- to the second highest in 10 years! 

And July's record was actually revised *up* by 3000.

Typically single unit permits peak first before multi-unit permits, as apartments and condos are something of a "substitution good" in place of the more desirable single family home (the 1980s stand out as an exception due to demographic factors as the Baby Boom was replaced by the smaller Gen X as first time buyers):

Because the NYC distortions didn't affect single housing unit permits, let's compare them with new home sales:

Single family homes are undeniably in an uptrend.  Single family permits continued to rise after 2015, and last made a new high in April.

The median price for a new single family home also hit a nearly 2 year  low in August:

This is probably not a coincidence.  Typically prices follow sales, as it takes a while for builders and sellers to "get the message" that sales have risen/fallen.  Since spring 2015, sales had gone more or less sideways.  Prices finally reacted, and with lower prices during an expansion, sales will increase. If the sales increase is sustained, builders and sellers will react again. 

Lower mortgage rates have historically been a positive for housing, and the post-Brexit 2016 mortgage rates are among the lowest ever:

That's why, even though the readings are somewhat mixed, I continue to count the housing market as an important long leading positive.

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