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New home sales are up 28% — but don’t believe the hype

New home sales are back to 1996 levels already. So, when we have a month where demand picks up, it can move the needle in a big way. 
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New home sales came in as a massive beat of sales estimates, with a 28% month-to-month increase. And, out of the 461,000 new homes available for sale, only 49,000 have been completed and are available to be occupied. These are both crazy stats!

Monthly supply data fell — in normal times this would be looked at as a bullish report for housing. However, in this environment, with falling year-over-year purchase application data, this report isn’t as bullish as it seems.

The explanation has a lot to do with the fact that new home sales are already very low, so these month-to-month reports can look wild. We had a period this summer when mortgage rates moved from 6.25% back down to 5% and some of the new home sales activity picked up. In general, however, these data lines are just very volatile and prone to revisions. In fact, we had this happen with new home sales in May, only for the data to revert back to the trend of declining sales.

The Census Bureau reported that sales of new single-family houses in August were at a seasonally adjusted annual rate of 685,000. This is 28% above the revised July rate of 532,000, but 0.1% below the August 2021 estimate of 686,000.

As you can see below, new home sales were historically low and as I’ve said before, we aren’t working from the peak 1.4 million level we saw in 2005. In fact, new home sales are below the recession level of 2000 and back to 1996 levels already. So, when we have a month where demand picks up, it can move the needle in a big way. 

Now, revisions are always key and the revisions in this report were positive. So the data can be very extreme in this environment, especially in a brief period of time when rates fell and some deals were able to close. For that reason, I wouldn’t read too much into the revisions.

However, it does show that the builders are in a much better spot to deal with their massive supply, compared to the 2005-2008 period. 


Of course, mortgage rates are much higher right now. As I am writing this, we have hit 7% on mortgage rates and that means the builders will need to be more mindful of their future supply and demand issues. They are good at selling their inventory much quicker than existing home sellers, who might still be stingy on prices.

My rule of thumb for anticipating builder behavior is based on the three-month average of supply:

  • When supply is 4.3 months and below, this is an excellent market for the builders.
  • When supply is 4.4 to 6.4 months, this is just an OK market for the builders. They will build as long as new home sales are growing.
  • The builders will pull back on construction when the supply is 6.5 months and above. 

The latest Census data shows that the seasonally adjusted estimate of new houses for sale at the end of August was 461,000, which is a supply of 8.1 months at the current sales rate.

As you can see, the monthly supply data swings wildly and, unlike the existing home sales market, it can move a lot faster up or down, especially in this rising-rate environment where a lot of homes are still under construction. Until the monthly supply gets below 6.5 months on a three-month average and new home sales are rising, this sector is still in a recession.

This rule of thumb for builders has worked for me in the past, as it adjusts to the difference between the new and existing home sales sector. 

And remember: Out of the 461,000 new homes available for sale, only 49,000 are completed and available to be occupied. That’s not a lot of homes and the builders will take their sweet time building out the rest of the homes in construction and the homes that haven’t even been started yet. 

Out of 8.1 months of supply, 5.36 months are under construction, 1.86 months have not been started yet and only 0.86 months are completed. 

You have to understand, the builders are here to make money and they have ways to move product much more efficiently than existing home sellers because they don’t need to obtain shelter once the home is sold. They just need to manage the supply and demand of their product and make sure they sell it at a price that works with their business model.
So, it’s not surprising that housing completion data hasn’t gone anywhere for some time now.

Hopefully, this can explain the crazy report we got today: not only was the headline a massive beat of estimates, but the previous month’s sales missed was revised higher. Because sales levels are so low and the data can get wild on a month-to-month basis, we do have reports like this from time to time.

The existing home sales marketplace is much bigger and has a lot more sales than the new home sales market, so it tends to not have crazy moves like this outside of some one-month event like the TRID implementation or COVID-19 pause in buying.

However, in general terms, the new home sales sector — just like the larger housing market is still in a recession as sales, production, jobs, and incomes are down. At some point in the future this changes, however, for now, rates are too high and I don’t see a change until they go lower. Once the monthly supply data can break under 6.5 months on a three-month average and sales trends are positive, I will change my tune. 

The post New home sales are up 28% — but don’t believe the hype appeared first on HousingWire.

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Expanding the arsenal of drugs against COVID-19

Researchers from Tokyo Medical and Dental University (TMDU) have developed novel compounds with potential as drug treatments for COVID-19 by modifying…

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Researchers from Tokyo Medical and Dental University (TMDU) have developed novel compounds with potential as drug treatments for COVID-19 by modifying a previous “hit” compound that was active against the SARS-CoV virus

Credit: Department of Medicinal Chemistry, TMDU

Researchers from Tokyo Medical and Dental University (TMDU) have developed novel compounds with potential as drug treatments for COVID-19 by modifying a previous “hit” compound that was active against the SARS-CoV virus

Tokyo, Japan – The ongoing COVID-19 pandemic, caused by the SARS-CoV-2 virus, has been devastating the entire world. While the vaccination program is advancing, drug treatments for COVID-19 are still highly important for those who become infected. Now, a team at Tokyo Medical and Dental University (TMDU), National Center for Global Health and Medicine (NCGM), Tohoku University, NCI/NIH, and Kumamoto University has designed and synthesized compounds that have the potential to be novel drugs targeting SARS-CoV-2.

The SARS-CoV-2 virus contains an enzyme called the “main protease”, or Mpro, that cleaves other proteins encoded in the SARS-CoV-2 genome as part of viral activity and replication. Mpro is an important and appealing target for drugs treating COVID-19 because it is both essential for viral replication and very different from any human molecules, so drugs targeting Mpro are likely to have few side effects and be very effective.

When testing a panel of compounds known to have inhibitory activity against SARS-CoV, the virus responsible for the 2002 SARS outbreak, the team identified a compound named 5h/YH-53 that showed some activity inhibiting SARS-CoV-2 Mpro, but was inefficient and unstable. Therefore, they used 5h as a starting point to develop other compounds with increased efficiency and stability. “Our strategy involved introducing fluorine atoms into the part of the molecule responsible for inhibiting Mpro to increase its binding affinity, as well as replacing a bond within 5h that is easily broken down by the liver with a different structure to increase biostability,” explains lead author Kohei Tsuji.

“Of the compounds we developed, compound 3 showed high potency and was able to block SARS-CoV-2 infection in vitro without any viral breakthrough,” explains senior author Hirokazu Tamamura. “Compound 4, a derivative of compound 3 in which an easily broken-down amide bond had been replaced with a stable thioamide bond, also showed remarkable anti-SARS-CoV-2 activity.” Although compound 4 had lower Mpro inhibitory activity than compound 3, the increased stability meant that the overall activity of compound 4 was comparable to that of compound 3.

When they tested these novel compounds on a variety of strains of SARS-CoV-2, compound 3 was as effective on mutant strains of the virus as on the ancestral Wuhan strain. Additionally, neither compound 3 or 4 showed any toxicity to cultured cells. These data suggest that these compounds show high potential as drug treatments for COVID-19.

A repertory of drug choice is important for treating disease, and so the development of efficient drugs to target the novel SARS-CoV-2 virus is highly important. This work identifies two compounds as potential drugs, and further development of these compounds continues. It also proves the principle that easily broken-down amide bonds can be replaced with thioamide bonds in drug development to increase the stability of the resulting compounds. Taken together, this is an important advance in both the wider drug development field as well as for drugs to treat COVID-19.

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The article, “Potent and Biostable Inhibitors of the Main Protease of SARS-CoV-2”, was published in iScience at DOI: 10.1016/j.isci.2022.105365
 


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Sinema out, Warnock in – Democrats narrowly control the Senate and Republicans the House, but gridlock won’t be the biggest problem for the new Congress

With Democrats running the Senate and the GOP in control of the House, there’s concern that Congress won’t get anything done. Turns out, unified government…

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Will gridlock mean the new Congress won't get anything done? mathisworks/Getty Images

In the wake of the 2022 U.S. midterm elections, a general sense of the political landscape in the upcoming 118th Congress has taken shape. With Sen. Kyrsten Sinema’s announcement that she is leaving the Democratic Party and Sen. Raphael Warnock’s victory in Georgia’s runoff, Democrats will maintain control in the Senate, while Republicans will take control of the House.

Divided government sparks fears of gridlock, a legislative standstill. At face value, this makes sense. Given the different policy priorities of the two major parties, you might expect to see each party passing legislation out of the chamber it controls that has little chance in the other chamber - and thus no chance of becoming law.

Logically, this means a less productive legislature than one in which a single party with a unified agenda controls both chambers and the presidency.

But as a political scientist who studies partisanship, I believe that divided government – including during the upcoming legislative session – will not produce greatly different legislative results than unified government.

This isn’t exactly a hopeful story, though.

Not much passes

The first reason that divided government isn’t less productive than unified government is because unified government isn’t very productive in the first place. It’s really hard to get things done even when the same party controls both chambers and the presidency.

Most legislation only clears the Senate if it has the 60 votes needed to break a filibuster. Neither party has come close to a so-called “filibuster-proof majority” of 60 seats since 2010, when Democrats briefly held 60 seats prior to Massachusetts Sen. Ted Kennedy’s death and the election of Republican Scott Brown to that seat. Thus, even a unified government is likely only passing measures that have some degree of minority party support.

A bunch of tired-looking men in suits at a meeting.
It can take a lot of talking and listening to get legislation passed in Congress. Here, a meeting of the Senate Foreign Relations Committee on Nov. 30, 2022. Chip Somodevilla/Getty Images

There are ways to force passage of legislation when one party doesn’t want it to pass. A process called budget reconciliation is not subject to filibuster, but it can only be used on provisions that deal directly with changes in revenues or spending. This is what happened with the Inflation Reduction Act of 2022, which Democrats were able to pass via reconciliation, with Vice President Kamala Harris casting the tiebreaking vote.

Further, legislative success under unified government assumes that the majority party is united. There is no guarantee of this, as seen in 2017 when Republican senators John McCain, Lisa Murkowski and Susan Collins joined Democrats in blocking the repeal of the Affordable Care Act.

Between 2011 and 2020 the vast majority of new laws clearing the House – roughly 90% – and the Senate – roughly 75% –did so with a majority of minority party members in support.

Even landmark legislation usually has support from most minority party members in at least one chamber. For example, the substantial 2020 revision of the North American Free Trade Agreement, or NAFTA, passed the House and Senate with overwhelming bipartisan support, as did the defense bill that created the Space Force.

A group of people going down the stairs of the US Capitol building on a sunny day.
While Congress is not that productive, sometimes it passes legislation. In 2020, lawmakers stream out of the Capitol after passing the Coronavirus Aid, Relief, and Economic Security Act. Bill Clark/CQ-Roll Call, Inc via Getty Images

Rewards – and risks – in crossing lines

On a more positive note, divided government may still provide opportunities for legislative breakthroughs.

The reason? The local orientation of Congress – lawmakers need to respond to their district’s voters.

In the House, according to a New York Times analysis, Republicans won 10 of the most competitive districts, including five in New York state alone. But the Cook Partisan Voting Index, which measures how strongly a district leans in favor of one party or the other, scores some of these districts as tilting Democratic – potentially giving these Republican members of Congress reason to reach across the aisle. The same goes for Democratic lawmakers whose districts tilt Republican.

But these kinds of mixed districts can also make it hard for sitting lawmakers to vote with their own party. While parties will work to keep a united front, research suggests that voters may punish those members of Congress who toe the party line too closely – providing a potential incentive for crossing party lines. Democratic legislators in Republican-leaning districts who voted for the Affordable Care Act, the Dodd-Frank financial regulation bill, or the stimulus bill, all Democratic Party priorities, suffered electorally in the 2010 midterms, receiving a lower vote share than those who voted against the legislation. In many cases, these lawmakers lost their seats.

Still, defections may be more likely given weak leadership, and currently it’s not certain who will fill the speaker’s role in the next Congress.

More consequential aspects

You don’t have to search for long to see examples of large legislative achievements produced during periods of divided government.

Divided government produced welfare reform in the 1990s and Social Security reform in the 1980s. The Coronavirus Aid, Relief and Economic Security (CARES) Act passed a Republican Senate and a Democratic House overwhelmingly in March 2020.

Certainly, there have been times during which unified governments have pushed legislation through with little minority party support. The Affordable Care Act and the Trump tax cuts were among them. But bipartisan legislative victories are much more common.

There are probably more consequential aspects to the GOP’s takeover of the House of Representatives than concerns over legislative gridlock.

House Republicans have already talked about using the investigatory powers of the chamber to investigate everyone from Hunter Biden to Anthony Fauci. A debt ceiling showdown, in which the GOP might use the threat of default on the U.S. government’s debt to force spending cuts, looms for what feels like the dozenth time in the past several years.

Matt Harris does not work for, consult, own shares in or receive funding from any company or organization that would benefit from this article, and has disclosed no relevant affiliations beyond their academic appointment.

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Team undertakes study of two-dimensional transition metal chalcogenides

Two-dimensional materials, like transition metal dichalcogenide, have applications in public health because of their large surface area and high surface…

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Two-dimensional materials, like transition metal dichalcogenide, have applications in public health because of their large surface area and high surface sensitivities, along with their unique electrical, optical, and electrochemical properties. A research team has undertaken a review study of methods used to modulate the properties of two-dimensional transition metal dichalcogenide (TMD). These methods have important biomedical applications, including biosensing.

Credit: Nano Research Energy, Tsinghua University Press

Two-dimensional materials, like transition metal dichalcogenide, have applications in public health because of their large surface area and high surface sensitivities, along with their unique electrical, optical, and electrochemical properties. A research team has undertaken a review study of methods used to modulate the properties of two-dimensional transition metal dichalcogenide (TMD). These methods have important biomedical applications, including biosensing.

 

The team’s work is published in the journal Nano Research Energy on November 23, 2022.

 

The team’s goal is to present a comprehensive summarization of this promising field and show challenges and opportunities available in this research area. “In this review, we focus on the state-of-the-art methods to modulate properties of two-dimensional TMD and their applications in biosensing. In particular, we thoroughly discuss the structure, intrinsic properties, property modulation methods, and biosensing applications of TMD,” said Yu Lei, an assistant professor at the Institute of Materials Research, Shenzhen International Graduate School, Tsinghua University.

 

Since graphene was discovered in 2004, two-dimensional materials, such as TMD, have attracted significant attention. Because of its unique properties, two-dimensional TMD can serve as the atomically thin platforms for energy storage and conversion, photoelectric conversion, catalysis, and biosensing. TMD also displays a wide band structure and has unusual optical properties. Yet another benefit of two-dimensional TMD is that it can be produced in large quantities at a low cost.

 

In public health, reliable and affordable in vitro and in vivo detection of biomolecules is essential for disease prevention and diagnosis. Especially during the COVID-19 pandemic, people have suffered not only from the physical disease, but also from the psychological problems related to extensive exposure to stress. Extensive stress can result in abnormal levels in biomarkers such as serotonin, dopamine, cortisol, and epinephrine. So, it is essential that scientists find non-invasive ways to monitor these biomarkers in body fluids, such as sweat, tears, and saliva. In order for health care professionals to quickly and accurately assess a person’s stress and diagnose psychological disease, biosensors are of significant importance in the diagnostics, environmental monitoring, and forensic industries.

 

The team reviewed the use of two-dimensional TMD as the functional material for biosensing, the approaches to modulate the properties of TMD, and different types of TMD-based biosensors including electric, optical, and electrochemical sensors. “Public health study is always a major task in preventing, diagnosing, and fighting off the diseases. Developing ultrasensitive and selective biosensors is critical for diseases prevention and diagnosing,” said Bilu Liu, an associate professor and a principal investigator at Shenzhen Geim Graphene Center, Shenzhen International Graduate School, Tsinghua University.

 

Two-dimensional TMD is a very sensitive platform for biosensing. These two-dimensional TMD based electrical/optical/electrochemical sensors have been readily used for biosensors ranging from small ions and molecules, such as Ca2+, H+, H2O2, NO2, NH3, to biomolecules such as dopamine and cortisol, that are related to central nervous disease, and all the way to molecule complexities, such as bacteria, virus, and protein.

 

The research team determined that despite the remarkable potentials, many challenges related to TMD-based biosensors still need to be solved before they can make a real impact. They suggest several possible research directions. The team recommends that the feedback loop assisted by machine learning be used to reduce the testing time needed to build the database needed for finding the proper biomolecules and TMD pairs. Their second recommendation is the use of a feedback loop assisted by machine learning to achieve the on-demand property modulation and biomolecules/TMD database. Knowing that TMD-based composites exhibit excellent performance when constructed into devices, their third recommendation is that surface modifications, such as defects and vacancies, be adopted to improve the activity of the TMD-based composites. Their last recommendation is that low-cost manufacturing methods at low temperature be developed to prepare TMD. The current chemical vapor deposition method used to prepare TMD can lead to cracks and wrinkles. A low-cost, low-temperature method would improve the quality of the films. “As the key technical issues are solved, the devices based on two-dimensional TMD will be the overarching candidates for the new healthcare technologies,” said Lei.

 

The Tsinghua University team includes Yichao Bai and Linxuan Sun, and Yu Lei from the Institute of Materials Research, Tsinghua Shenzhen International Graduate School and the Guangdong Provincial Key Laboratory of Thermal Management Engineering and Materials, Tsinghua Shenzhen International Graduate School; along with Qiangmin Yu and Bilu Liu from the Institute of Materials Research, Tsinghua Shenzhen International Graduate School, and the Shenzhen Geim Graphene Center, Tsinghua-Berkeley Shenzhen Institute & Institute of Materials Research, Tsinghua Shenzhen International Graduate School.

 

This research is funded by the National Natural Science Foundation of China, the National Science Fund for Distinguished Young Scholars, Guangdong Innovative and Entrepreneurial Research Team Program, the Shenzhen Basic Research Project, the Scientific Research Start-up Funds at Tsinghua Shenzhen International Graduate School, and Shenzhen Basic Research Project.

 

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About Nano Research Energy 

 

Nano Research Energy is launched by Tsinghua University Press, aiming at being an international, open-access and interdisciplinary journal. We will publish research on cutting-edge advanced nanomaterials and nanotechnology for energy. It is dedicated to exploring various aspects of energy-related research that utilizes nanomaterials and nanotechnology, including but not limited to energy generation, conversion, storage, conservation, clean energy, etc. Nano Research Energy will publish four types of manuscripts, that is, Communications, Research Articles, Reviews, and Perspectives in an open-access form.

 

About SciOpen 

 

SciOpen is a professional open access resource for discovery of scientific and technical content published by the Tsinghua University Press and its publishing partners, providing the scholarly publishing community with innovative technology and market-leading capabilities. SciOpen provides end-to-end services across manuscript submission, peer review, content hosting, analytics, and identity management and expert advice to ensure each journal’s development by offering a range of options across all functions as Journal Layout, Production Services, Editorial Services, Marketing and Promotions, Online Functionality, etc. By digitalizing the publishing process, SciOpen widens the reach, deepens the impact, and accelerates the exchange of ideas.

 


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