The Census Bureau reported new home sales for January at a seasonally adjusted annual rate of 923,000 units. That’s a 4.3 percent increase from revised December figures and 19.3 percent higher than January of last year. Previous months were also revised higher. The median price of a new home came in at $346,400. The average price of a new home contracted in January was $408,800. That’s a new record high for average new home prices in the U.S….in January. The supply of new homes available for sale dipped to 4.0 months.
New home sales in the Dallas-Fort Worth area were up 7 percent from January 2020. Pending sales of new construction, the closest comparison to the Census contract estimates, were up 32 percent. With mortgage interest rates hitting fresh new lows at the start of the year, it’s no surprise that prospective buyers were snatching up anything in sight.
With virtually no resale inventory on the ground, new construction looks even more appealing. Median and average new home prices in the DFW area are still off record highs from a few years ago. That is likely going to change as we head into the spring selling season. Average new home prices look like they could set another record in coming months. The latest NTREIS figures show that Denton County did just that, posting a new record high for average new home prices at $437,927, barely eclipsing the previous record in July 2018.
True inflation in the North Texas housing market is actually worse than those headline numbers indicate. To see how purchasing power has been diminished by the Fed’s policies, it’s better to look at prices per square foot. Builders have kept median prices at least somewhat manageable only by shrinking the size of the homes and lots. Real median new home prices are hitting new highs as well.
The Fed’s balance sheet ramp is the catalyst that could make it happen, $7.55 trillion and climbing.
Powell was busy this week doing what central bankers to best, fanning the flames of asset inflation while dodging questions about asset bubbles, wealth inequality and the destruction in the purchasing power of the U.S. dollar. Audacious mendacity is now a regular feature of most Fed press conferences and Congressional testimony involving monetary policy.
The real estate industry is happy to play along as Powel fans the flames of asset inflation and perverse speculation in the markets. What’s not to like about higher home sales and fatter commission checks. Every day’s a great day to buy a home is the usual message. The bond market smells a rat, but Powell is continuing full speed ahead with the Fed’s $120 billion per month in asset purchases (aka QE). It would seem we are destined to revisit the mistakes of the past, shoveling ever larger amounts of liquidity into a corrupt financial system and expecting a better result.
“Ayn Rand’s ‘philosophy’ is nearly perfect in its immorality, which makes the size of her audience all the more ominous and symptomatic as we enter a curious new phase in our society to justify and extol human greed and egotism. We are the United States of Amnesia, we learn nothing because we remember nothing.” Gore Vidal
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