November New Home Sales Up 5.8%

New home sales beat expectations in November, HUD and the Census Bureau reported over the holiday season, rising by nearly 6 percent from October.

The report said sales of new single‐family houses in November rose to a seasonally adjusted annual rate of 640,000, 5.8 percent above the revised October rate of 605,000, but 15.3 percent lower than a year ago (756,000).

Courtesy HUD, Census Bureau.

Regionally, sales were mixed. The largest region, the South, saw a 2.1 percent decline in November sales to 369,000 units, seasonally annually adjusted, from 377,000 units in October; from a year ago, sales in the South fell by 15 percent.

In the West, however, new home sales jumped by nearly 28 percent in November to 171,000 units, seasonally annually adjusted, from 134,000 units in October but fell by 26.6 percent from a year ago. In the Midwest, sales jumped in November by 21.3 percent to 57,000 units from 47,000 units in October and improved by 3.6 percent from a year ago. In the Northeast, sales fell by 8.5 percent in November to 43,000 units from 47,000 units in October but improved by 26.5 percent from a year ago.

“Lower mortgage rates, builder incentives and a lack of existing-home inventory likely boosted sales in November,” said Odeta Kushi, Deputy Chief Economist with First American Financial Corp., Santa Ana, Calif. “Builder sentiment and permit data indicate ongoing weakness in the new-home market. With higher mortgage rates and greater economic uncertainty, new-home prices will need to continue to adjust to entice more buyers.”

Kushi noted the increase in new home sales in November came mostly from sales of homes that have not started construction, with that count up 46.7% month-over-month. “Only 7% of new-home sales were priced below $300,000, down from 12% one year ago,” she said. “Before the pandemic, in November 2019, 40% of new-home sales were priced below $300,000. It continues to be a difficult environment for potential first-time home buyers looking for a new starter home.”

The report said the median sales price of new houses sold in November rose to $471,200; the average sales price was $543,600. The seasonally‐adjusted estimate of new houses for sale at the end of November rose to 461,000, representing a supply of 8.6 months at the current sales rate.