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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.

No "Balm in Gilead" from March New-Home Sales

Is there no balm in Gilead? None was forthcoming in today's new-home sales data for March. This was one indicator that had not shown much ill effect from the cold winter, so no one was looking for a sharp March bounce-back. Still, consensus expectations were for a steady sales number that would keep hope alive for accelerated housing activity and soothe worries about growth. Nevermore.

New-home sales data are widely regarded as one of the government's least reliable indicators. Accordingly, then, one should not conclude that today's news means doom and gloom for the housing market. Still, it may be merely stating the obvious to say that nothing in the recent range of housing data support the notion that homebuilding is on the rise.

As you can see in the accompanying chart, single-family housing starts have been churning wildly around a zerogrowth trend for over a year. It will take a sharp rebound in new-home sales a month from now before we can see the same of this indicator. Meanwhile, existing-home sales have been dropping for eight months and the best one can say is that they may have stabilized lately.

Of course, the numbers can change in a hurry. That housing has been flat for a year does not ensure that it will stay flat. Still, it is an understatement to say that the recent flatness/softness provides no "balm" for the accelerating housing story that seems to be embedded in market consensus expectations for economic growth and for bond yields.

Sales and Starts of New, Single-Family Homes
April Sales and Starts of New, Single-Family Homes Chart
Source: Census Bureau. As of 31 Mar 14

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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