New Home Sales End 2018 On Up Note

New single-family home sales finished 2018 on a positive note, improving by nearly 4 percent, HUD and the Census Bureau reported yesterday.

The report–delayed by more than a month because of the recent government shutdown–showed sales of new single‐family houses in December at a seasonally adjusted annual rate of 621,000, 3.7 percent higher than the downwardly revised November rate of 599,000, but 2.4 lower than a year ago (636,000).

Regionally, sales in the South increased by 5 percent, seasonally annually adjusted, in December to 375,000 units from 357,000 units in November and improved by 7.4 percent from a year ago. In the West, sales rose by 1.4 percent in December to 143,000 units from 141,000 in November.

In the Northeast, sales jumped by nearly 45 percent in December to 42,000 units, seasonally annually adjusted, from 29,000 units in November and improved by 16.7 percent from a year ago. Only the Midwest saw a drop, falling by 15.3 perccent in December to 61,000 units from 72,000 units in November and fell by 3.2 ercent from a year ago.

HUD/Census estimated 622,000 new homes sold in 2018, 1.5 percent higher than 2017 (613,000) but the weakest yearly gain since 2011.

The report said the median sales price of new houses sold in December rose to $318,600; the average sales price rose to $377,000. Inventories fell to 344,000 at the end of December, representing a supply of 6.6 months at the current sales rate.

Mark Vitner, senior economist with Wells Fargo Securities, said weakened sales in the second half of the year had an impact on builder confidence. “We expect sales to gradually improve in coming months given the rebound in builder sentiment and lower mortgage rates,” he said.