New home sales continued to enjoy a hurricane-related boost in October. The Census Bureau reported new single-family home sales at a seasonally adjusted annual rate of 685,000, up 6.2 percent from revised September numbers and 18.7 percent higher than a year ago. The median price of a new home in October was $312,800 while the average price of a new home was $400,200.

The talking heads will no doubt see this as a boon for the housing industry, and the numbers are certainly encouraging. That being said, I wouldn’t read too much into the volatile Census numbers. While the average price of a new home hit a new all-time high and the inventory of new homes in the U.S. is still low, the momentum behind the housing market is only as solid as the Fed’s backstop. The recent bump in new home sales in September and October also has the smell of hurricane-related activity. There are no doubt many new home sales which were simply delayed by hurricanes Harvey and Irma.

Last week the National Association of Realtors reported existing home sales in October were down roughly 1 percent compared to 2016 numbers. This recent bump in new home sales may help to bridge the enormous gap between existing and new home sales activity. For that gap to close completely builders will have to find a way to build more affordable homes at prices buyers can actually afford, a daunting task considering our outlandishly manipulated markets. The attached graph showing the longer-term trend of new home sales provides some much-needed context, especially considering the current “recovery” in new home sales was built on the back of the Fed’s massive balance sheet expansion and suppression of interest rates.

For the time being new home sales are still enjoying decent growth. Things could change in a hurry if the Fed follows through on their promises of a balance sheet unwind, something they have yet to do. The probability¬†of an inverted yield curve are growing by the day, and that could spell trouble for an inflated housing market. If you are in the market for a new home, my advice is to tread cautiously. In many cases, things are not what they seem to be, and there are plenty of opportunists who are willing to ignore reality for the sake of a sale or a commission check. You can visit my new home buyer’s guide for a primer on buying a new home.