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Economy in Brief

U.S. New Home Sales Up 1.6% in December, Mixed by Region
by Carol Stone, CBE  January 28, 2021

• December sales increase in 2 regions, decrease in 2 regions.

• Median price rises 3.5% to new all-time high.

Sales of new single-family homes edged upward in December to 842,000 (SAAR), +1.6% m/m and 15.2% y/y. from 829,000 in November; the earlier month was revised down from 841,000. October is now reported at 949,000, up from 945,000 and September’s 965,000 is unrevised from the prior report. The Action Economics Forecast Survey expected 866,000 in December. The December sales results yielded total new home sales for 2020 of 811,000, up 18.8% from 2019.

As illustrated in the first graph above, the gain in new home sales has been associated with an extraordinary decline in mortgage rates, with the contract rate on Freddie Mac-sponsored loans reaching an all-time low of 2.68% in December and edging back up to 2.74% this month.

Sales performance was mixed by region in December. The Midwest and West had gains while the Northeast and South saw declines. Midwest sales rose 22,000, a surge of 30.6% from November’s 72,000, reaching 94,000; that made the y/y increase.13.3%. In the West, sales gained 19,000 to 234,000, an 8.8% rise m/m and 10.4% y/y. By contrast, sales in South dropped 26,000, or -5.1% m/m to 483,000, up 21.7% y/y. In the Northeast, sales decreased 2,000 or 6.1% m/m to 31,000 and 20.5% y/y.

The median price of a new home advanced 3.5% in December to $355,900 (8.0% y/y). The average price of a new home, though, edged up just 0.4% in the month to $394,900 (4.6% y/y). These prices are not seasonally adjusted.

The supply of new homes on the market in December represented 4.3 months of sales, slightly more than November’s 4.2 months. The preceding four months saw inventories of 3.5 or 3.6 months of sales. As was noted here last month, though, the recent increase in months’ supply is still notable less than in prior periods; over the last five years, in fact, the average has been 5.5 months and in December 2018, it was 7.4 months. The median number of months a new home stayed on the market after completion was 3.1 in December, down from 4.0 months in November. from an upwardly revised 4.1 months in October. These figures were down from a high of 4.5 months in both August and September.

New home sales activity and prices are available in Haver's USECON database. The consensus expectation figure from Action Economics is available in the AS1REPNA database.

U.S. New Single-Family Home Sales (SAAR, 000s) Dec Nov Oct Dec Y/Y % 2020 2019 2018
Total 842 829 949 15.2 811 683 617
  Northeast 31 33 38 -20.5 36 30 32
  Midwest 94 72 102 13.3 89 72 76
  South 483 509 536 21.7 469 399 348
  West 234 215 273 10.4 217 182 160
Median Price (NSA, $) 355,900 343,900 345,500 8.0 333,100 321,500 326,400
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