US Apr new home sales (seasonally adjusted) dropped 7.7% yoy, reported last month.
The drop was long overdue, as interest rate (thus mortgage rate) has been high for quite some time.
The yoy strength from Apr 2023 – Mar 2024 was due to
A) the base effect
As most of 2022 was pretty weak after the war in Ukraine broke out. Fed also started the rate hiking cycle in Mar 2022.
B) the amazing AI-driven tech rally
Nasdaq rose over 60% from end of Sep 2022 to end of Mar 2024.
It reached all-time-high so even if you invested at the peak of 2021, you will still make money.
I bet many people enjoyed the wealth effect from stocks.
The base for the next 6 month (May 2023 – Oct 2023) looks pretty high, so yoy comparison should look weak, which is good if Fed is looking for “weak data”.
Meanwhile, inventory (new home for sale) has reached ATH since Feb 2024.
Previous high was 466k, seen in Oct 2022.
Time to clear the inventory is climbing in recent months. Now (Apr 2024) it’s 9.1 month vs. an average of 9.8 month between Jun 2022 to Oct 2022.
The median price for new homes sold is quite stable since Fed increased interest rate.
