New Home Sales Dip In November, But Remain At Healthy Levels - December 24, 2013
The Commerce Department has just reported that sales of new homes ticked down slightly in November, coming in at an annualized rate of 464,000 units. That was off nominally from the 474,000 level tallied in October, but was well above the September total of 403,000 new homes sold.
Importantly, the latest figures for September and October had been upwardly revised from prior estimates. To wit, September sales previously had been estimated at just 354,000 homes, while the October forecast rose from 444,000 units to the aforementioned 474,000 properties. So, the latest data, albeit down from the revised prior-month total, was actually up from the initially estimated level. Expectations had been for 440,000 homes to have been sold on an annual basis in November.
Not only was the November level still appreciable, but the total was up sharply from the year-earlier sales rate, when an estimated 398,000 sales had been closed.
All told, the latest results put home sales at a five-year high, with this report further affirming that the historic collapse in housing is getting ever-more into the rearview mirror. In fact, sales in October were the highest since July of 2008.
Breaking the report down by region, we find that such sales were off by 26.6% in the Midwest, the nation's second smallest region after the Northeast. This latter locale, meantime, saw sales rise by 15.2% last month. In the two largest regions, the South and the West, sales were down 9.1% and up 31.1%, respectively. The new home sales market is much smaller than the existing home sales sector and notably more volatile and weather dependent, especially during the late fall and winter.
Finally, the median price of a new home rose 4.5% last month, to $270,900, from October. Also, sales were up 10.6% from a year earlier. This was the strongest annual growth since June. While the supply of new homes on the market declined last month to just a 4.3-month supply. A supply of six months is considered normal and healthy. Given such low inventory, we assume that demand will remain strong, but that sales will be capped by the low supply.
Taken as a whole, this was a good report and one that suggests the recovery in housing, which is becoming quite formidable, will continue into 2014.
At the time of this article's writing, the author did not have positions in any of the companies mentioned.