US New Home Sales reviewed - Nomura
Analysts at Nomura offered their review of US New Home Sales.
"New single-family home sales rose 6.2% m-o-m in October to an annualized pace of 685k, well above expectations (Nomura: -4.9% to 634k, Consensus: -7.4% to 627k) and up from the downwardly-revised 645k in September (previously reported as 667k). Sales in the South region rose again in October by a modest 1.3% mo-m, following a sharp 19.6% increase in September, likely reflecting the continued recovery from the recent hurricanes. Other regions increased robustly in October, contributing to an upside surprise in aggregate new home sales. Single-family homes for sale rose steadily, but supply at the current sales pace has inched down to 4.9 months in October, from 5.2 months in September, likely reflecting a pick-up in sales. Strong job creation and low mortgage costs have been supportive of healthy consumer demand. However, high demand and slow supply growth have exacerbated home affordability, which could hurt demand in the longer run.
GDP tracking update: Stronger-than-expected October new home sales suggest brokers’ commissions, a sub-component of residential investment, may have been modestly greater than we anticipated. Further, we expect a modest boost to single-family residential construction in the near term as groundbreaking for new homes sold takes place. Thus, we raised our Q4 real GDP tracking estimate by 0.1pp to 2.6% q-o-q saar."