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Worth notingAgendaTue, Oct 27 ET 10:00 AM1 min read
New-home sales measure sales of newly built homes, not construction starts or existing-home transactions. September's sales change is estimated at -3.5%, compared with the previous 6.4%, pointing from growth to decline. Recent reports show fewer housing starts, weak pending existing-home sales and some builder discounting. This release tests whether demand for builders' homes is also under pressure.[1]
Expected −3.5% Last release 6.4%
If it comes in above expectations If the sales change is above -3.5%, new-home sales are more resilient than expected, even if that means only a smaller decline. Builders would face less pressure to scale back future projects, but sales alone would not establish better profit per home.[1]
If it comes in below expectations If the sales change is below -3.5%, sales declined more than expected. Builders may need more incentives to attract buyers or fewer new projects, reducing demand for materials and construction work.[1]
For stocks, firmer sales support the revenue outlook for homebuilders, materials suppliers and furniture and appliance sellers. But sales won through large incentives may not improve builders' profits. Weaker sales threaten both future construction and moving-related purchases; companies with more cash and less inventory have more room to respond. Watch prices, homes available for sale and builders' incentive disclosures rather than treating better sales as proof that financing pressure has disappeared.[1]