December New Home Sales Fall, But Analysts See Positive 2018 Momentum
New home sales finished 2017 on a down note, but analysts liked what they saw nonetheless.
HUD and the Census Bureau reported December new home sales came in at a seasonally adjusted rate of 625,000, 9.3 percent below November’s revised 689,000 but 14 percent higher than a year ago (548,000).
Sales fell across all regions. In the South, sales fell by 9.8 percent in December to 331,000 units, seasonally annually adjusted, from 367,000 units in November but improved by nearly 16 percent from a year ago. In the West, sales fell by 9.5 percent to 190,000 units in December from 210,000 in November but improved by nearly 19 percent from a year ago.
In the Midwest, sales fell by 10 percent to 63,000 units, seasonally adjusted, in December from November’s 70,000 and fell by 3.1 percent from a year ago. In the Northeast, sales fell by 2.4 percent in December to 41,000 units from 42,000 in November but improved by nearly 11 percent from a year ago.
HUD/Census estimated 608,000 new homes were sold in 2017, 8.3 percent higher than 2016 (561,000).
“December’s 625,000-unit pace is still solid and points to solid momentum heading into 2018,” said Mark Vitner, senior economist with Wells Fargo Securities, Charlotte, N.C. “Housing data this time of the year is often volatile, as the seasonal adjustment process normally makes huge corrections to the underlying data. November’s extraordinary surge made it difficult for a large gain in December, exaggerating the slip on the month.”
Vitner said the coming year should be even stronger. “Recent data point to an optimistic outlook for the new home sales market in 2018,” he said. “Home builder confidence remains near a multi-decade high, as an increasingly short supply of existing homes on the market increases buyer traffic for new homes. The strong job market and low interest rates support homeownership.”
HUD/Census reported the median sales price of new houses sold in December was $335,400; the average sales price was $398,900. The seasonally adjusted estimate of new houses for sale at the end of December was 295,000, representing a supply of 5.7 months at the current sales rate.
