Unexpected Gain for New Home Sales in November

Data for November indicated a surprise gain for the seasonally adjusted annual rate of new single-family home sales. The data was delayed due to the partial government shutdown. Survey data, including builder confidence, suggest December estimates, when published, will show market weakness however.

Contracts for new, single-family home sales increased almost 17% to a 657,000 seasonally adjusted annual rate according to estimates from the joint release of HUD and the Census Bureau. Moreover, there were notable upward revisions for months going back to June. For example, the weak month of October was revised up from an annual rate of 544,000 to to a still low rate of 562,000.

Nonetheless, on a year-to-date basis, new single-family home sales, despite a second half slowdown, are running 2.7% higher than the total for 2017 through November.

Sales showed particular strength in lower price tiers, where inventory is needed the most. For example, relative to November 2017 sales (the strongest month of data over the last year on an seasonally adjusted annualized basis), sales of homes priced below $300,000 totaled 24,000 in November 2018.  That total was 20,000 in November 2017. The median price of new home sales fell to $302,400, down from $343,400 a year ago, as price concession use increased among some builders.

Inventory continued to rise in November, rising to 330,000 homes available for sale. The months’ supply measure declined to 6.0, after reaching 7.0 with the revised October data, which indicated elevated inventory levels. The count of completed, ready-to-occupy new single-family homes in inventory has increased from 65,000 in November 2017 to 76,000 in November 2018.

 



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