Each day the Research staff takes a look at recently released economic indicators, addressing what these indicators mean for REALTORS® and their clients. Today’s update discusses new home sales and the debt situation in Europe.

  • New single-family home sales inched up 1.3 percent in October to an annualized rate of 307,000.  Quite remarkably the new home sales figure, known for its volatile swings, has been stable at around 300,000 for the past 18 months, but it is stable at very low levels.
  • A normal annual figure for new home sales should be about 800,000 to 1 million.  During the bubble years, it reached 1.3 million.
  • The reason for new home sales being stuck at a low point is that builders are unable to add more construction despite 40-year lows on the inventory of newly constructed homes, because home builders are having trouble obtaining construction loans.
  • In separate news coming out of Europe, it looks like some bailout package will be set aside to help roll-over sovereign debts that are coming due.  It means that there will not be any government default, at least over the short-term horizon.  Big euro countries Spain and Italy were facing the risk of being unable to roll over debt.
  • The nature of the bailout package is unclear.  German voters may never approve of sending German tax dollars to help out profligate countries.  In my opinion, the result is likely to be that the European Central Bank will have to step up and print money to buy the debts of Greece, Spain, Italy, and other shaky governments if there are no private sector buyers of these government bonds.  Does that mean future inflation?

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