New Home Sales Rise, Still Lower Than Expected

Rising construction is bringing supply into the housing sector and helping to lift new home sales, which rose 4.3 percent in November to what is still however a lower-than-expected annualized rate of 490,000. The month-to-month gain follows a very strong 6.3 percent rise in October which, however, has been revised sharply lower to 470,000 from an initial 495,000. Houses for sale rose 5,000 in the month to 232,000 which is up from 210,000 in November last year. At the current sales rate, supply is at 5.7 months which, because of the rise in sales, is down slightly from October. Still, rising permit data point to more homes coming into the market.

Price data are also constructive, up 6.3 percent in the month to a median $305,000 with the year-on-year, which had been negative, up 0.8 percent. Still, this is a modest year-on-year rate and, relative to the very strong 9.1 percent year-on-year sales gain, points to discounting. Prices in this report appear to have room to move higher.

Regional sales data have the West up more than 20 percent in the month with the year-on-year rate at plus 4.7 percent. Sales in the South, which is by far the largest region, rose 4.5 percent in the month for an outstanding year-on-year gain of 19.4 percent. The Midwest and Northeast both show monthly and yearly declines.

Sales of existing homes have been limping along but sales of new home sales, despite all the monthly volatility which is routine for this report, are solid and look to remain solid.

Recent History Of This Indicator:
Samples are small and monthly data often swing wildly as new home sales soared 10.7 percent in October to nearly reverse a giant 12.9 percent plunge in September. At a consensus 503,000 annualized rate, Econoday forecasters see a comparatively tame 1.6 percent gain for sales in November. Supply of new homes has been tight but hasn't been helping prices which, in this report, were down a year-on-year 6.0 percent in October. Permits for single-family homes have been on the climb which does point to less tightness in supply ahead.