New Home Sales Up in November

Sales of newly-built homes rose 4.4% to a seasonally-adjusted annual rate of 377,000, the highest monthly level since the end of the home buyer tax credit in April 2010. On a regional basis, the largest increase in absolute and percentage terms (21.1%) was the South with a 38,000 monthly increase from an unusually low October figure of 180,000. The Northeast region also saw an increase of 3,000 sales for a 12.5% increase. The Midwest declined 12.5% to 49,000 sales but the October figure was unusually high at 56,000. The West saw a 17.8% fall to 83,000, the lowest monthly figure since March 2012.
The inventory of unsold homes increased slightly to 149,000 but the higher sales pace helped reduce the months’ of supply to 4.7 months. The November level is tied with May, July, August and September of 2012 as the lowest levels since the 2005 boom. The number of completed homes for sale and ready to move in remains extremely low at 41,000 for the entire US.
The median sales price rose 14.9% and average prices rose 20% that are likely a combined effect of higher priced homes sold and a reflection in the cost of building materials and lot price increases. The share of homes sold for more than one-half million dollars doubled from 5% in October to 10% in November. Lumber and sheet products like plywood and OSB have also been rising steadily for most of 2012. As developed lots become scarce, the underlying cost of bringing more lots into the market has also increased and will continue to put upward pressure on new home prices.
The future of new home sales continues to look positive as mortgage rates remain very low, home prices stabilize and pent-up demand continues to emerge. NAHB expects new home sales to increase another 22% in 2013 to an annual rate of 456,000 assuming the Congress and Administration do agree on a tax and spending compromise. If not, housing will suffer in 2013.

Months’ Supply of New Homes



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