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First Cut: December sales of new single-family home highest in seven months

Sales of new single family homes rose 3.7% in December to 621,000, up from 599,000 in November and the highest since 653,000 in May 2018. The increase was unexpected, but not unwelcome. Given the relatively narrow supply of homes available for sale — 6.6 months’ work in February after 6.7 months in November — about 2/3 of this was related to contracts on new development or replacement housing. Sales were roughly evenly split among units not started (213,000), units under construction (179,000), and units completed (229,000).

 

By region, three of four had increase. The Northeast jumped 44.8%, the South was up 5.0%, and the West was up 1.4%. The increase in the Northeast is harder to explain than the other two. There may have been some pent-up demand that was released when mortgage rates moved lower. The South and West are still recovering from natural disasters that destroyed housing stock. Sales in the Midwest were down 15.3%, but seem to be settling into a trend.

The median price of a new home was up 5.0% to $318,600 in December, while the year-over-year price was down 7.2%. Some of this is due to housing sales increasing in lower price points.

 

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