Home Logon FTA Investment Managers Blog Subscribe About Us Contact Us

Search by Ticker, Keyword or CUSIP       
 
 

Blog Home
   Brian Wesbury
Chief Economist
 
Bio
X •  LinkedIn
   Bob Stein
Deputy Chief Economist
Bio
X •  LinkedIn
 
  New Single-Family Home Sales Increased 5.8% in November
Posted Under: Data Watch • Government • Home Sales • Housing • Inflation • Fed Reserve
Supporting Image for Blog Post

 

Implications:  New home sales surprised to the upside in November, rising for the second month in a row and signaling that activity may finally be stabilizing after falling for most of 2022.  The main issue this year has been declining affordability, with potential buyers getting squeezed by both higher prices and rapidly rising mortgage rates.  Assuming a 20% down payment, the change in mortgage rates and home prices since December 2021 amount to a 69% increase in monthly payments on a new 30-year mortgage for the median new home.  No wonder sales have slowed down!  With 30-year mortgage rates currently sitting near 6.5%, financing costs remain a headwind.  However, it’s important to note that mortgage rates have recently fallen roughly 80 basis points from the peak, with most of the decline occurring during November.  Given that new home sales are a timelier indicator of the housing market, because they are calculated when contracts are signed, it’s not surprising we are seeing signs of life in today’s report while sales of existing homes (which are counted when contracts are closed) continue to struggle.  Another piece of good news is that while a lack of inventory has contributed to price gains in the past couple of years, and inventories did slip in November itself, inventories have made substantial gains versus a couple of year ago.  The months’ supply of new homes (how long it would take to sell the current inventory at today’s sales pace) is now 8.6, up significantly from 3.3 early on in the pandemic.  While the months’ supply of completed homes is still a relatively low 1.2, the inventory of completed single-family homes has begun to rise quite rapidly as builders finish more units and rising cancellation rates on purchases leave potential buyers with more options. Though not a recipe for a significant rebound, the combination of moderating mortgage rates and more inventories should continue to put a floor under sales activity.  One problem with assessing housing activity is that the Federal Reserve held interest rates artificially low for more than a decade.  With rates now in a more normal range, the sticker shock on mortgage rates for potential buyers is very real.  However, we have had strong housing markets with rates at current levels in the past, and homebuyers will eventually adjust.

Click here for a PDF version

Posted on Friday, December 23, 2022 @ 12:07 PM • Post Link Print this post Printer Friendly

These posts were prepared by First Trust Advisors L.P., and reflect the current opinion of the authors. They are based upon sources and data believed to be accurate and reliable. Opinions and forward looking statements expressed are subject to change without notice. This information does not constitute a solicitation or an offer to buy or sell any security.
Search Posts
 PREVIOUS POSTS
Personal Income Rose 0.4% in November
Greedy Innkeeper or Generous Capitalist?
Real GDP Growth in Q3 Was Revised Higher to a 3.2% Annual Rate
Is the BLS Cooking the Books?
Existing Home Sales Declined 7.7% in November
Housing Starts Declined 0.5% in November
Still Unprecedented
High Frequency Data Tracker 12/16/2022
Retail Sales Declined 0.6% in November
Industrial Production Declined 0.2% in November
Archive
Skip Navigation Links.
Expand 20242024
Expand 20232023
Expand 20222022
Expand 20212021
Expand 20202020
Expand 20192019
Expand 20182018
Expand 20172017
Expand 20162016
Expand 20152015
Expand 20142014
Expand 20132013
Expand 20122012
Expand 20112011
Expand 20102010

Search by Topic
Skip Navigation Links.

 
The information presented is not intended to constitute an investment recommendation for, or advice to, any specific person. By providing this information, First Trust is not undertaking to give advice in any fiduciary capacity within the meaning of ERISA, the Internal Revenue Code or any other regulatory framework. Financial professionals are responsible for evaluating investment risks independently and for exercising independent judgment in determining whether investments are appropriate for their clients.
Follow First Trust:  
First Trust Portfolios L.P.  Member SIPC and FINRA. (Form CRS)   •  First Trust Advisors L.P. (Form CRS)
Home |  Important Legal Information |  Privacy Policy |  California Privacy Policy |  Business Continuity Plan |  FINRA BrokerCheck
Copyright © 2024 All rights reserved.