A report from the U.S. Census Bureau released this morning showed that sales of new single-family homes in America rose by 5.2 percent in November to a seasonally adjusted annual rate of 592K units. That was better than economists had expected, the largest monthly gain since July, and the highest reading in four months. Regionally, home sales were flat in the Northeast, fell in the South (-3.1 percent), and increased in the West (+7.7 percent) and the Midwest (+43.8 percent). The inventory of new single-family homes rose for the third month in a row in November, and months’ supply slid to 5.1 at the current sales pace. The median selling price of new houses sold lifted to $305,400 last month, although that is down 3.7 percent on a year-over-year basis and only the second annual decline recorded in 2016. There were a few revisions to the prior months’ headline figures but total sales have still grown by 16.5 percent over the past year. Mortgage rates, though, have risen considerably in December, and subsequent reports will therefore be more telling about how homebuyers are responding. It is also worth mentioning that new home sales are extremely volatile and account for a relatively small portion of the overall U.S. housing market. However, this metric is still worth keeping close track of because historically new home sales tend to head sharply lower ahead of a recession, something which has yet to happen during the current economic cycle.
Sources: Econoday, Bloomberg, U.S. Census Bureau, FRBSLPost author: Charles Couch