U.S. new home sales sharply exceeded estimates
U.S. new home sales sharply exceeded estimates with a -0.7% October pull-back to 733k after 32k in net upward revisions, as new home sales fluctuate just below what is now a lofty 738k (was 701k) September pace that marks a 12-year high. Indeed, three of the last five monthly sales figures were stronger than any figure seen since 2007. Analysts saw the expected 2.1% bounce in the median price after small net upward revisions, and a 0.3% uptick in inventories that leaves a -3.3% y/y drop. The housing sector is poised for rapid Q4 growth given today's robust sales data, and strength in last week's solid October figures for housing starts, permits, and existing home sales. The home sales data have strengthened substantially since the beginning of 2019 with lower mortgage rates, and this recovery should continue as long as Fed policy remains accommodative. Analysts expect a sturdy 723k Q4 pace for new home sales that marks a new cycle-high, following a prior cycle-high pace of 701k (was 691k) in Q3. Analysts still expect a Q3 GDP growth boost to 2.0% from 1.9%, despite a -$1 B revision in residential investment that leaves an estimated 4.4% (was 5.1%) Q3 clip. Analysts expect GDP growth of 2.4% in Q4 with a 6.4% growth pace for residential investment. The Q3 and Q4 residential component gains follow declines in each of the six quarters through Q2.