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By the Numbers

Featuring brief segments of economic analysis from our senior economist Michael Bazdarich, PhD.

The economic analysis we previously featured in By the Numbers is now available on the Western Asset Blog. This page will no longer be updated.

Home Sales...What We Don't Know

It is debatable how much the government shutdown will affect reported economic growth. What is beyond dispute is that the shutdown-induced absence of new economic data from various bureaus within the U.S. Department of Commerce is making it harder to determine what is going on in the economy.

As this month’s By the Numbers installments have attested, job markets and the manufacturing sector did just fine in December. However, new data on homebuilding has been notably absent. The only new information available on housing is the existing-home sales numbers released by the (private-sector) National Association of Realtors (NAR), and that information showed marked declines in home sales in December. December data on new-home sales from Commerce were to be released today, but the announcement was suspended, just as was the November release a month ago.

The paucity of data on housing is especially a concern given that housing activity had begun to head lower in recent months. The accompanying chart shows new-home sales data through October (from the U.S. Census Bureau) and existing-home sales data through December (from NAR). As you can see, both "flavors" of home sales peaked in November 2017, and both had declined markedly through the first 10 months of 2018.

As mentioned above, existing-home sales have declined further in the last two months and are back to early-2015 levels. Given the coherence between the two over the past year, there is reason to believe new-home sales have also dropped back to early-2015 levels through December, but this is only an educated guess given the lack of actual data.

The issue, of course, is whether these declines threaten a recession. Our best guess at present is that they do not, especially in view of the recent strength in job growth and manufacturing output. Still, as mentioned at the outset, it is getting harder to make such statements with any confidence as more months of no-data pile up for new-home sales, housing starts, and residential construction spending.

Home Sales
Home Sales
Source: National Association of Realtors, Census Bureau. As of 31 Dec 18

Michael Bazdarich

Product Specialist/Economist

Mike brings more than 45 years of experience to his position. "By the Numbers" will address economic data releases that are pertinent to a broad range of investors.

Prior to joining the Firm in 2005, Mike ran his own consulting firm, MB Economics. He earned his PhD in Economics at the University of Chicago.

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