 | New Single-Family Home Sales Declined 7.0% in December to a 414,000 Annual Rate |
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| Posted Under: Data Watch • Home Sales • Housing |
Implications: New home sales disappointed in December, coming in at a 414,000 annual rate, well below the consensus expected 455,000 pace. Plunges like this sometimes happen in the winter and December was both colder and snowier than usual. As a result, we anticipate a steep rebound in sales as soon as the monthly weather patterns get back to normal. For all of 2013, home builders sold 430,000 new homes, the best level since 2008. As the chart to the right shows, the new home market remains in a clear improving trend. It has by no means been a straight line higher, but the 12-month moving average for new home sales is at its highest level since February 2009. Although the inventory of new homes declined 5,000 units in December, it is still up 14% from a year ago. The months' supply of new homes – how long it would take to sell all the new homes in inventory – rose to 5.0 in December, well below the average of 5.7 over the past twenty years. As a result, as the pace of sales continues to recover in the years ahead, home builders still have plenty of room to increase inventories. Another way to think about it is that the construction of new homes can outpace a rising pace of sales. On the price front, the median sales price of a new home was up 4.6% from a year ago, while average prices are up 4.1%. Prices will continue to rise in the year ahead, but not quite as fast as stronger construction makes more supply available. A slowdown in the pace of home price increases is becoming apparent in other housing data, too.
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