 | New Single-Family Home Sales Declined 2.1% in November |
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| Posted Under: Data Watch • Home Sales • Housing |
Implications: New home sales came in at a 464,000 annual pace in November. Besides last month, which was revised up substantially, this is the highest rate since July 2008. As the chart to the right shows, the new home market is clearly improving. 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 12,000 units in November, they are still up 12.1% from a year ago. The months' supply of new homes – how long it would take to sell all the new homes in inventory – declined to 4.3 in November, 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 10.6% from a year ago, while average prices are up 17.1%. 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 already apparent in other data out this morning. The FHFA index, which measures prices for homes financed with conforming mortgages, increased 0.5% in October. Although it's up 8.2% from a year ago, it's up at slower 4.3% annual rate in the past three months. Meanwhile, the Richmond Fed index remained at a healthy +13 in December. Plugging this into our models for the national ISM Manufacturing index, suggests an increase to 58.0 in December from 57.3 in November. By contrast, most analysts expect the national ISM to decline.
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