New Home Sales Soft to Begin Year

March 15, 2019

Slowly catching up after the 35-day government shutdown, HUD and the Census Bureau reported sales of new single‐family houses in January fell by nearly 7 percent from December.

The report said January sales came in at a seasonally adjusted annual rate of 607,000, down by 6.9 percent from the revised December rate of 652,000 and is 4.1 percent lower than a year ago (633,000).

Regionally, sales fell across the board except in the West, where they jumped by nearly 28 percent to 184,000 units, seasonally annually adjusted, from 144,000 units in December, but fell by 3.2 percent from a year ago.

In the South, sales fell by 15.1 percent to 342,000 units, seasonally annually adjusted, from 403,000 units in December, but improved by 6.2 percent from a year ago. In the Midwest, sales fell by nearly 29 percent to 50,000 units in January from 70,000 units in December and fell by nearly 42 percent from a year ago. In the Northeast, sales fell by 11.4 percent to 31,000 units in January from 35,000 units in December and fell by 11.4 percent from a year ago.

HUD/Census reported the median sales price of new houses sold in January fell to $317,200; the average sales price fell to $373,100. Inventories fell by nearly 5 percent to 336,000 at the end of January, representing a supply of 6.6 months at the current sales rate.

Mark Vitner, senior economist with Wells Fargo Securities, noted while January numbers fell, sales for the previous three months were revised significantly higher.

“Consensus estimates had called for a modest increase, as home builders had reported a rise in prospective buyer traffic earlier this year,” Vitner said. “Home builder confidence and consumer confidence have both rebounded, following the Fed’s monetary policy pivot. Moreover, with mortgage rates about a half of a percentage point lower than they were in December, mortgage purchase applications have increased. Given the improvement in these advance indicators, we are looking for some improvement in new home sales as we move into the spring.”