The U.S. housing market has delivered plenty of surprises in recent years, but few as puzzling as the data released for August. According to new government figures, new-home sales surged to an annualized 800,000 units last month, up sharply from July’s upwardly revised 664,000 and far above the consensus forecast of 650,000. For a sector weighed down by rising mortgage rates, stretched affordability, and a cooling labor market, the number was so startling that one leading analyst called it “implausible.”
Oliver Allen, senior U.S. economist at Pantheon Macroeconomics, isn’t buying it. In a research note titled US New Home Sales: Outlook grim, despite August’s implausible leap in sales, Allen says the data “defies credulity” when set against the broader trends shaping housing. He further questioned whether the headline spike accurately reflects underlying demand, or is destined to be revised away in the coming months. Calculating it as a 20.5% jump, Allen said it’s “inexplicable” that new-home sales would jump to their highest level in more than three years all of a sudden.
When reached for comment, Allen told Fortune that while discussions about the quality of U.S. economic data have “obviously been more prominent than usual this year,” given President Trump’s firing of the chief of the Bureau of Labor Statistics, he doesn’t see the implausible August data fitting into a larger pattern. “Generally speaking, the economic data in the U.S. is very comprehensive, high quality, and the statistical agencies are very clear and open about their methods.” Still, he said the new home sales numbers are a U.S. data series “well towards the lower end of the quality spectrum,” commonly featuring huge margins of error, significant revisions, and high volatility. He said the the picture for new home sales from the National Association of Home Builders (NAHB) is usually a “far more reasonable-looking description of the likely trend.”
