New Home Sales Surprisingly Drop In December - January 25, 2013
The housing market is clearly on the mend, but even in this noticeably better setting, there can be some surprising blips along the way. And we have just seen one such setback on the new home sales front for December. To be sure, the month-to-month decline of 7.3%, to an estimated yearly rate last month of 369,000 homes sold, was not all that material. That is especially so as November's estimated growth rate was revised higher from an initially targeted 377,000 homes sold to a 398,000 unit sales pace.
However, there is no mistaking the fact that this was a somewhat disappointing end to a notably better year, which saw gradual improvement across all lines of the housing market, including construction, sales, and pricing.
Meanwhile, in contrast to the lower volume, we saw a gain in the median price of a new home last month. Specifically, the median price of such a residence sold in December came to $248,900. That was up from November's median price of $245,600. Economists, meantime, believe that housing added to the nation's gross domestic product last year for the first time since 2005. Estimated figures for fourth-quarter GDP will be out next Wednesday. Our sense is that growth averaged, or exceeded, 1.5% in the latest period, a somewhat lesser falloff from the third quarter than had appeared likely just a few weeks ago.
As to the full-year showing, there were an estimated 367,000 new homes sold last year, which was up 19.9% from the year before, a formidable and encouraging increase. True, there is plenty of room for further gains, and we would expect to see some of that progress in 2013. But there is also no mistaking the strides being made, on average, across the various housing categories.
As to a region-by-region breakdown, we saw a big drop last month in the Northeast, which is the smallest of the four sectors of the country in terms of new dwellings sold. We did see a nice gain in the Midwest, however, which is the second smallest locale, but modest retracements in the South and the West, the two largest regions. As to a year-to-year comparison, the latest month brought a major increase from December of 2011. To wit, December 2012 saw, as noted, an annual sales rate of 369,000 homes. That was up 8.8% from the prior December, when an estimated 339,000 homes were sold. In all, the latest December's total was the third highest monthly sales rate of 2012. Taken as a whole, this report, albeit a bit disappointing, was not a decline of note, and we continue to expect housing to be a material contributor to the nation's economic well being in 2013.