Upward revisions to December and November data resulted in a 6.9% decline for new single-family homes sales in January, according to data from the joint release of HUD and the Census Bureau. The seasonally adjusted annualized January pace of 607,000 was 4.1% lower than January of 2018; however, combined with lower mortgage interest rates, the first monthly rate for 2019 establishes a solid foundation on which to build heading into higher volume sales months.
After the data revisions, new home sales ended 2018 up 2.3% at 627,000, compared to the 613,000 total for 2017. Despite a decline in available new home inventory, the month’s supply number remains somewhat elevated at 6.6. The current rate of sales remains off the post-Great Recession trend due to housing affordability concerns made worse by the late 2018 rise in mortgage interest rates. Mortgage rates have declined in 2019, which in turn should lead to additional new home demand. Builder confidence has also stabilized in recent months.
The sales distribution data for January highlight market opportunities for new single-family home sales at certain price points. For example, in January 2018 51% of new home sales occurred in the $200,000 to $400,000 price class. For January 2019, this share increased to 66%. This expansion occurred as higher priced home sales slowed. In January 2018, 29% of new home sales were priced in the $400,000 to $750,000 range. This market share fell to 22% in January of 2019.
Inventory posted a slight decline in January, after a slowing of housing starts at the end of the year. New home inventory declined from 341,000 homes available for sale to 336,000 in January. A year prior, new single-family home inventory stood at 295,000. The count of completed, ready-to-occupy new single-family homes in inventory (seasonally adjusted) was 70,000 in January 2019, compared to 63,000 in January 2018.
Sales of homes which had not started construction expanded in November and December 2018, as builders slowed production due to market concerns. However, on a seasonally adjusted annual basis such sales declined in January, falling from a 250,000 annual pace in December to 183,000 as market caution declined and builder confidence stabilized.