This is a syndicated repost courtesy of Confounded Interest – Online Course Notes for Financial Markets. To view original, click here. Reposted with permission.
New home sale figures are out for December and they showed a Month-over-month (MoM) decline of -9.3%. However, on a YoY basis, new home sales rose +14.4%.
The biggest loser? The midwest, likely attributable to the Cleveland Browns winless season and the Cleveland Cavaliers trading their star point guard (Kyrie Irvin) to the Boston Celtics for a ball hog (Isiah Thomas) and a second-string power forward (Jae Crowder), declined -10% MoM. Or the blasting cold of midwest winters.
If we compare new home sales to existing home sales, notice that existing home sales (blue line) recovered faster than new home sales (white line) since the house price bubble burst and ensuing financial crisis and recession (purple line). Despite the growth in the US population, new home sales are at 1993 levels.
Liquidity moves markets!Click here to learn how you can follow the money.
Like existing home sales, new home sales are plagued by a lack of new construction and inventory.
The lack of growth in new home sales is directly linked to the decline in sub-602 FICO borrowers applying for a mortgage.
Wall Street Examiner Disclosure:Lee Adler, The Wall Street Examiner reposts third party content with the permission of the publisher. I am a contractor for Money Map Press, publisher of Money Morning, Sure Money, and other information products. I curate posts here on the basis of whether they represent an interesting and logical point of view, that may or may not agree with my own views. Some of the content includes the original publisher's promotional messages. In some cases I receive promotional consideration on a contingent basis, when paid subscriptions result. The opinions expressed in these reposts are not those of the Wall Street Examiner or Lee Adler, unless authored by me, under my byline. No endorsement of third party content is either expressed or implied by posting the content. Do your own due diligence when considering the offerings of information providers.