Despite December Decline, New Home Sales End 2017 Higher


According to the US Census Bureau and the US Department of Housing and Urban Development, sales of new single-family homes moderated in December 2017, giving back a portion of the gains accrued in November. Over the month of December, sales of new single-family homes fell by 9.3 percent to a seasonally adjusted annual rate of 625,000 following a 15.1 percent increase to a downwardly revised level of 689,000 in November. Declines were registered across all four regions of the country with comparable decreases in the Midwest (-10.0%), the South (-9.8%), and the West (-9.5%). However, sales over the full year were 8.3 percent above their level in 2016 and each region of the country registered year-over-year gains.

Sales of new homes have now risen for six consecutive years. After falling to a recession-induced low of 305,000 in 2011, sales have nearly doubled reaching 608,000 over 2017. However, even at this level sales remain at historically low level. Similarly, the inventory of homes available for sale rose by 14 percent over 2017 to 293,000. However, by historical standards, the inventory of homes remains low as well.

Although sales of new homes overall have risen off of their cycle low in 2011, the distribution of sales across sales price categories has shifted. Sales of new homes priced above $200,000 are recovering as each category has recorded higher sales in 2017 than in 2011. Sales of homes priced above $300,000 have returned to their level in either 2003 or 2004. However, sales of homes priced below $200,000 have been steadily falling since 2003 and at 80,000 in 2017, is 14 percent of its 2003 local peak level. While greater demand and relatively low inventory is contributing to higher prices, the composition of sales by sales price is playing a role as well.

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