New Home Sales Falter in December for Full Year - January 27, 2014
Sales of new homes pulled back modestly in December, falling 7% to an annualized rate of 414,000 homes sold. That was off from the downwardly revised November total of 445,000 homes sold. Initially, the November new home sales total had been estimated at 464,000. Expectations had been for sales of 455,000 in December. Still, the December total was ahead of the final month of 2012, when the projected sales figure had been 396,000 homes.
However, for all of 2013, sales came to 428,000 homes. That was the highest volume total since 2008, when the housing market had been in the early stages of a multi-year free fall. It also compared very favorably with the 2012 full-year tally of 368,000 homes sold.
Meanwhile, the median price of a new home rose by 0.6% in December to $270,200. In all, the median, or midpoint on the pricing scale, was up 8.4% last year. That was the fastest annual growth in this category since 2005--two years before the market had reached its cyclical peak.
As to inventories of unsold homes, they increased from a 4.7 months’ supply in November to a 5.0-month supply in December. A six-month level is considered average and healthy. At the trough of the housing cycle in the first year of the business expansion, when housing was still faltering, inventories had been up near a full year's supply.
Breaking the report down, we find that sales were off notably in the Northeast, normally the smallest market, as sales in that region were down by more than 36% from November. Activity was likely off due to the weather. But sales were up in the Midwest and off just modestly in the two largest regions, the South and the West.
Looked at as a whole, this was not a major shift in trend; the market has been strong and notwithstanding the tick up in mortgages over the past year, it should remain a healthy sector in 2014, most likely because low inventories and rising prices are likely to make this a seller's market to some degree.
At the time of this article's writing, the author did not have positions in any of the companies mentioned.