MM29(b) - Existing Home Sales Versus New Home Sales
U.S. Existing Home Sales & New Home Sales
Comparing the Charts
When you look at both charts and compare them you can see that between June 2022 and Sept 2023 the decreasing EXISTING home sales negatively correlated with the increase in NEW home sales. This would make surface level sense given the lack of existing homes being available creating a need for new housing.
In recent months there has been a sharp divergence in the opposite direction, particularly in NEW home sales, which plunged from 717k in Sept 2023 to 590k in Nov 2023. EXISTING Home Sales increased marginally from 3.79m in Oct 2023 to 3.82m in Nov 2023. Is this a turning point?
Obviously a combination of factors are at work here and its not just existing supply coming to the market that might be disrupting new home sales or vice versa but its interesting seeing this correlation and its something to keep an eye on for investors and policy makers. Sale of brand new homes creates a lot of economic activity and if sales are declining significantly whilst existing homes are starting to come back onto the market, one would presume it would stress the housing market and the economy. We may need reduced interest rates sooner rather than later to help fan the flames of the new housing market, or maybe its time the market takes a breather? What do you think? It certainly adds to the argument for lower rates sooner from the Federal Reserve to "soften the landing" or that divergence noted today.
Each Chart is covered separately in todays Macro Monday
PUKA
Comparing the Charts
When you look at both charts and compare them you can see that between June 2022 and Sept 2023 the decreasing EXISTING home sales negatively correlated with the increase in NEW home sales. This would make surface level sense given the lack of existing homes being available creating a need for new housing.
In recent months there has been a sharp divergence in the opposite direction, particularly in NEW home sales, which plunged from 717k in Sept 2023 to 590k in Nov 2023. EXISTING Home Sales increased marginally from 3.79m in Oct 2023 to 3.82m in Nov 2023. Is this a turning point?
Obviously a combination of factors are at work here and its not just existing supply coming to the market that might be disrupting new home sales or vice versa but its interesting seeing this correlation and its something to keep an eye on for investors and policy makers. Sale of brand new homes creates a lot of economic activity and if sales are declining significantly whilst existing homes are starting to come back onto the market, one would presume it would stress the housing market and the economy. We may need reduced interest rates sooner rather than later to help fan the flames of the new housing market, or maybe its time the market takes a breather? What do you think? It certainly adds to the argument for lower rates sooner from the Federal Reserve to "soften the landing" or that divergence noted today.
Each Chart is covered separately in todays Macro Monday
PUKA
