December new home sales fell 10.4 percent from November, to 536,000 (SAAR), and finished 2016 down 0.4 percent year-over-year. Initially reported data from October and November was revised upward by a combined 14,000 sales.
New home sales missed expectations in December, and instead of finishing 2016 with a bang, sales of newly constructed homes went out with a whimper and actually ended the year down slightly from 2015 — at a time when the market needs the exact opposite. Combined with missed expectations for existing home sales data earlier this week, 2017 so far doesn’t seem to be shaping up to be a banner year for home buyers. Yes, it’s early, and there are some positive signs if one is willing to look: Unusually cold winter weather across much of the country last month likely kept many buyers indoors, potentially pushing some sales out a few months. And the number of new homes for sale finished 2016 up more than 10 percent year-over-year, which is good news for buyers struggling with chronically low inventory. And initially reported data from October and November was revised upward modestly, lending a bit more strength to the tail end of 2016 than initially thought. Still, December new home sales figures were the lowest since February, and prices keep rising, indicating a continued focus on the higher-end of the market, when it’s the lower ends that could use the attention. We expect home value growth to soften somewhat in 2017, in part because of more inventory coming on line. But these kinds of numbers won’t really get us there.
