New home sales fell sharply in December, and sales for the previous two months were revised sharply downward as well. The silver lining was that the number of new homes on the market experienced their largest month-over-month gain since April 2006.
New home sales ended 2017 on a disappointing note, falling 9.3 percent in December from November to 625,000 units at a seasonally adjusted annual rate (SAAR), according to the U.S. Census Bureau – reversing the gains of the prior month. Sales for October and November also were revised down by a combined 69,000 units. Instead of the 17.5 percent surge in new home sales initially reported for November, sales now appear to have increased at a more measured 10.4 percent pace that month.
New home sales in December 2017 were 14.1 percent above their December 2016 pace. Overall for the year, sales rose 8.4 percent, a slowdown from the 12 percent increase reported in 2016 and the 14.1 percent increase reported in 2015. Aside from the housing bust and its recovery, 2017 posted the smallest number of new homes sold (608,000 units) in any year since 1992.
If there was a silver lining in the December report, it was clearly inventory. The number of new homes on the market increased 3.9 percent, or 11,000 homes, from November to 295,000 units (SAAR).
It was the largest monthly increase in the number of new homes on the market since April 2006 and means that there are now more new homes for-sale than at any point since April 2009. New home inventory is up 15.2 percent year-over-year – a total of 39,000 more new homes on the market compared to December 2016.
However, the increase was driven almost entirely by homes for which construction had not yet started: For 10,000 of the 11,000 additional homes, or 91 percent, construction had not yet begun.
The median seasonally adjusted price of new homes sold in December reached a new all-time high, climbing 0.7 percent from November to $331,400. It’s up 2.5 percent over the past year.
