New home sales posted a small gain in November, after downward revisions for prior months. However, the sales pace for newly-built single-family homes is ending the year strong, with solid demand pointing to additional construction gains in 2020.
Contracts for new, single-family home sales increased slightly in November by 1.3% to a 719,000 seasonally adjusted annual rate according to estimates from the joint release of HUD and the Census Bureau. However, that gain came off of downward revisions for prior months in the fall.
Year-to-date, the 2019 estimate of sales through November is 9.8% higher compared to the year-to-date total for 2018. This gain returns the new home sales pace to the general trend line it has been on since the end of the Great Recession. This general rising trend for new home sales, after the housing affordability crunch of 2018, suggests additional construction gains in 2020. Sales are being supported by ongoing low interest rates and historically low unemployment.
The current months’ supply of new single-family homes stands at a healthy level of 5.4 after peaking at an elevated 7.4 in December 2018. After rising over much of the post-Great Recession cycle, new home inventory measurably declined from January of 2019 until stabilizing in September. The count of completed, ready-to-occupy new homes is just 76,000 homes nationwide.
Median new home sales price (price of a home in the middle of the distribution) has been rising as inventories of resale and new homes remain tight. Median new home sales price increased to $330,800 in November.
Regionally, for the first eleven months of 2019 (and relative to the first eleven months of 2018), new home sales were up 14.5% in the South, 12% in the West, and down 7.6% in the Midwest and 10.4% in the Northeast.