We got a pleasant surprise with the New Home Sales numbers! Remember, New Home Sales is a measurement of signed contracts on new homes, and it rose 29% in August. The current 685,000-unit annualized pace is much better than the 6% decline that was expected. With this unexpected but welcomed news, we are about even with August of last year. Given the most recent trends in housing data, this is great news.
Buyers are turning to new homes because the supply of existing homes is still tight. The median price for these homes was about $437,000 - half the homes sold above this number and half the homes sold below it. As of right now, many of the new homes being purchased are still under construction. Hopefully, we'll see an increase in finished builds to help balance the market.
The most recent Personal Consumption Expenditures (PCE) data shows an increase in inflation by 0.3% which was higher than expectations. The Core PCE reading, which removes food and energy data, increased by 0.6%, and the year-over-year reading increased from 4.7% to 4.9%.
Keep in mind that, every time we've had two consecutive quarters of negative GDP since 1947, it has been labeled a recession. The National Bureau of Economic Research (NBER) is unwilling the classify our current situation as a recession. It seems as though they're waiting for other economic indicators but, given the trend of two consecutive quarters of negative GDP, it leads us to ask - Why hasn't a recession been announced?
In any case, we saw a revised estimate for third-quarter GDP dropping from 2.6% to 0.3% coming from the Atlanta Fed. If we see another quarter of negative GDP, it will be pretty difficult for the NBER to keep dragging its feet.
Next week, we'll take a look at some employment data. This will be important because some are unwilling to announce a recession until the unemployment numbers match. Stay tuned!
What first-time homebuyers need to know:
Many first-time homebuyers are waiting to purchase until rates decrease. Meanwhile, home values are appreciated. Waiting until rates drop, saving a couple of hundred dollars per month, will likely result in paying thousands more for a home.
Often times, first-time homebuyers are shocked at what they can afford with a minimum down payment.