To all,
New Home Sales data is compiled monthly by the Department of Commerce's Census Bureau and is gathered from builders throughout the country. The data represents new home sales for the nation as well as four areas of the country: the Northeast, the Midwest, the South, and the West. Information on the average price of a home, the number of homes for sale, and the supply of unsold homes are also provided. The data is an important indicator because it shows any strength or weakness in the housing sector. The housing sector data is valuable because when consumer spending changes, it appears in this sector first. Consequently, a chain reaction typically occurs. A slowdown in new home sales tends to lead to a slowdown in housing starts, which will continue to affect other indicators possibly resulting in a recession, as has been the recent concern of most everyone.
New Home Sales data is often volatile and difficult to predict. Most analysts look at a three-month average in order to see any trends in the growth rate. Surges in the release are often greeted with little more than an average reaction in the bond market. However, the data remains significant in showing the condition of the housing sector of the economy. The housing sector had been a bright spot of the economy in years past but as of late has been a major disappointment. The tightening of the credit markets has really put a damper on housing in general.
If interest rates rise, further weakness could be placed on new home sales. However, if interest rates remain steady, new home sales may be able to stabilize.
The risks of floating far outweigh the potential benefits. Therefore, a cautious approach is necessary to protect against short-term movements in mortgage interest rates. Now is a great time to take advantage of mortgage interest rates at their relatively favorable levels. While it is a good time to take advantage of rates, and has been for some time, rates did drop late Friday afternoon. Give me some time to let my investors get in for those with true rate lock questions.
Greg Adelman
http://www.midwesthomecenter.com/
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