Despite a period of weakness during the Fall of 2018, new home sales ended 2018 up 1.5% compared to the total for 2017. Contracts for new, single-family home sales increased almost 4% to a 621,000 seasonally adjusted annual rate according to estimates from the joint release of HUD and the Census Bureau. However, the surprisingly strong initially reported November pace was revised down from a 657,000 rate to a more expected 599,000.
For the year 2018 new single-family home sales summed to 622,000, compared to 613,000 in 2017. As can be seen on the graph above, while the December pace improved, the current rate of sales remains off the post-Great Recession trend due to housing affordability concerns made worse by the rise in mortgage interest rates at the end of the year. Mortgage rates have declined in 2019, which in turn should lead to additional new home demand. Builder confidence has also stabilized in recent months.
Regionally, new home sales in 2018 were 16% lower in the Northeast and 1% lower in the West. Sales were 4% higher in the South and 6% higher in the Midwest.
New home prices unexpectedly increased in December, rising to a median price of $318,600. However, prices are lower than a year ago ($343,300) due to rising use of price incentives and a slow change toward additional entry-level inventory.
Inventory continued to rise in December, increasing to 344,000 homes available for sale. A year prior, new single-family home inventory stood at 294,000. The months’ supply measure held relatively steady at an elevated 6.6. The count of completed, ready-to-occupy new single-family homes in inventory (seasonally adjusted) increased from 63,000 in December 2017 to 71,000 in December 2018.