This is becoming a trend. New Home Sales for the month of October were released earlier today and once again missed expectations. While economists were expecting the headline reading to come in at 575K, the actual reading came in 31K below that consensus forecast at 544K. The last time we’ve seen a monthly print in New Home Sales this low was back in March 2016. Not only is this month’s report notable for the fact that sales printed at a 2.5 year low, but it also marked the fifth straight month where sales missed expectations. Usually after a couple of months of weaker than expected reports, economists adjust their forecasts to account for the weakness, but in this case, they haven’t been able to catch up. Using our Economic Indicator Database, we looked to see how the current streak of weaker than expected New Home Sales reports stacks up over time, and what we found was pretty amazing. Going all the way back to 1999, there has never been a streak where New Home Sales missed expectations for five straight months. During the housing crisis and in the early stages of the recovery, there were three streaks where New Home Sales missed expectations four months in a row but never for five straight months.
Not only have economists consistently overestimated New Home Sales, but they have also been way off the mark. The chart below shows the rolling five-month spread between the actual initially reported print for New Home Sales versus consensus expectations. With misses of -31K, -72K, -1K, -18K, and -37K in the last five months, the total deviation between actual and estimated New Home Sales has been -159K. Looking back over time, there haven’t been a whole lot of periods where the spread was this wide indicating just how weak recent housing activity has been relative to expectations.