New Home Sales Shoot to 13 Year High

By Mark Lieberman

Managing Director and Senior Economist

Highlights:

  • Pace of contracts for new home sales SHOT UP 7.9 percent in January to a seasonally adjusted annual rate (SAAR) of 764,000;
  • The December sales pace originally reported as 694,000 was REVISED UP to 708,000
  • The inventory of unsold new homes ROSE 1,000 in January to 328,000;
  • With the faster sales pace, the months’ supply of new homes for sale FELLto 5.1 in January from 5.5 in December;
  • Median price of a new home ROSE $24,100, 7.4 percent, to $348,200 in January, after falling $3,900 in December;
  • Year-year the median price of a new home is UP 14.0 percent or $42,800.

Trends:

  • The sales pace for new single-family homes rose to its highest level since July 2007;
  • The month-month increase in homes for sale was the largest since last June (up 131,000)
  • The number of homes for sale has risen year-year fort eight straight months

Data Source: Census Bureau and Department of Housing and Urban Development

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Sales of new single-family homes rose sharply in January, barreling to a post Recession high of 764,000, the Census Bureau and Department of Housing and Urban Development reported jointly Wednesday.

Buyers shrugged off a 7.4 percent increase in prices, as the average rate on a 30-year fixed rate mortgage fell to 3.62 percent from 3.72 percent in December, 2019. The average rate was 4.46 percent in January 2019.

A new home sale occurs when a sales contract is signed or a deposit is accepted. The home can be in any stage of construction: not yet started, under construction or completed. In addition to adjusting for seasonal effects, the January reading of 764,000 units is the number of homes that would sell if this pace continued for the next 12 months. The parallel statistic for existing home is in the National Association of Realtors’ Pending Home Sales report.

The Census-HUD report goes a long way to explaining the high level of builder confidence noted in the National Association of Home Builders’ Housing Market Index. The HMI was at 74 this month according to NAHB.

New home act6ivity is clearly on an upward trajectory.  The seasonally adjusted annual rate of sales has topped 700,000 for six of the last eight months and averaged 692,000 over the last 12 months, a gain of 11.7 percent over the 619,000 average for the previous 12 months. At the same time the number of residential construction jobs has increased by 1.5 percent while there are 2.3 unemployed construction workers for every job openings in the sector.

Hear Mark Lieberman on P.O.T.U.S. (Sirius-XM 124) Friday at 6:20 am Eastern Time. You can follow Mark Lieberman on Twitter at @foxeconomics.

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