New Home Sales Post Strong Year-End Gain

January 28, 2016

New home sales rose by nearly 11 percent in December, HUD and the Census Bureau reported yesterday.

The report said sales of new single-family houses improved to 544,000, seasonally adjusted, a 10.8 percent increase over November’s revised 491,000 and 9.9 percent higher than a year ago (495,000).

Regionally, sales improved across the board, although by just 0.4 percent in the South, the largest region. Sales totaled 273,000 units, seasonally annually adjusted, from 272,000 in November; sales were unchanged from a year ago. In the West, sales jumped by 21 percent to 167,000 units from 138,000 units in November and rose by 21.9 percent from a year ago. In the Midwest, sales rose by 31.6 percent to 75,000 units in December from 57,000 units in November and improved by nearly 39 percent from a year ago. In the Northeast, sales rose by 20.8 percent in December to 29,000 units from 24,000 units in November but fell by 6.5 percent from a year ago.

HUD/Census estimated 501,000 new homes sold in 2015, a 14.5 percent increase from 2014 (437,000).

“Monthly data can be volatile, but the 14.5 percent gain in new homes sold during 2015 clearly points to improvement over the past year,” said Mark Vitner, senior economist with Wells Fargo Securities, Charlotte, N.C.

The median sales price of new houses sold in December fell to $288,900; the average sales price dropped to $346,400. The seasonally adjusted estimate of new houses for sale at the end of December rose to 237,000, representing a 5.2-month supply at the current sales rate.

Higher-priced homes accounted for a larger share of new homes sold in 2015, the report said. Homes above $400,000 accounted for 28 percent of the total, up from 21 percent in 2013 and 24 percent in 2014.

“Price appreciation for all homes could account for some of the higher share of pricier homes,” Vitner said. “That said, the higher ratio of mean new home prices to median new home prices suggests rising prices for all homes cannot fully explain the shifting distribution.”