New homes sales were up 10.8% in December to 544,000 on a seasonally-adjusted annual basis (SAAR) and finished 2015 just past half million (501,000) for the best year since 2007. The increase in signed contracts to purchase a new home comes as mortgage rates remain very low by historic standards and the US economy continues to gain strength.
Sales were up in every census region although nominally in the South by 0.4%, to 273,000. In other regions, the Northeast was up 21% to 29,000 (SAAR), the Midwest up 32% to 75,000 and the West up 21% to 167,000. For the year, the Northeast was down 12% to 24,000 new homes sales, which is the worse year since 2011. Other regions performed much better with the Midwest up 3.2% to 60,000, the best year since 2008; the South was up 17.6% to 285,000, the best year since 2007; and the West was up 20.5% to 130,000, the best year since 2007.
Inventories continue to build even in the face of labor and lot shortages. December’s unsold inventory increased 2.6% to 237,000, the highest since October 2009. Even with the increase in sales, the months’ supply fell to 5.2 months.
The median sales price fell 4.3% to $288,900 due primarily to a decline in sales over $750,000 and an increase in sales between $200,000 and $300,000. The trend suggests more first time home buyers are entering the market.
The shares of signed contracts that are still under construction or not yet started have climbed back to near the same levels has the early 2000s as builders switch from selling off left over inventory to selling from the stock of homes under construction or planned but not yet started.