New Home Sales in November – A Better Second Act?

In a joint release the Census Bureau and Department of Housing and Urban Development reported that newly constructed single family homes sold at a seasonally adjusted annual pace of 438 thousand in November, down slightly from October’s 445 thousand pace (-1.6%). Inventories of new homes for sale inched up 1.4% to 213 thousand.

New home sales have moved up or sideways depending on your lens. After a turbulent 18 months, slowed by an interest rate spike and harsh winter, sales are roughly in line with the average of those gyrations. But viewing that volatility as the product of a pair of one-off events with transitory effects, sales have trended upward in the second half of the year from a low point in July.

We take the latter view and expect that with a strengthening in the labor market and broader economy, continuing low interest rates, and cautiously expanding inventories new homes sales are poised for a better end than beginning of 2014 and accelerating gains in 2015.

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