Tuesday, January 27, 2015

New Home Sales at 481,000 Annual Rate in December, Highest December since 2007

by Bill McBride on 1/27/2015 10:00:00 AM

The Census Bureau reports New Home Sales in December were at a seasonally adjusted annual rate (SAAR) of 481 thousand.

October sales were revised up from 445 thousand to 462 thousand, and November sales were revised down from 438 thousand to 431 thousand.

"Sales of new single-family houses in December 2014 were at a seasonally adjusted annual rate of 481,000, according to estimates released jointly today by the U.S. Census Bureau and the Department of Housing and Urban Development. This is 11.6 percent above the revised November rate of 431,000 and is 8.8 percent above the December 2013 estimate of 442,000."
New Home SalesClick on graph for larger image.

The first graph shows New Home Sales vs. recessions since 1963. The dashed line is the current sales rate.

Even with the increase in sales over the previous two years, new home sales are still close to the bottom for previous recessions.

The second graph shows New Home Months of Supply.

New Home Sales, Months of SupplyThe months of supply decreased in December to 5.5 months from 6.0 months in November.

The all time record was 12.1 months of supply in January 2009.

This is now in the normal range (less than 6 months supply is normal).
"The seasonally adjusted estimate of new houses for sale at the end of December was 219,000. This represents a supply of 5.5 months at the current sales rate."
New Home Sales, InventoryOn inventory, according to the Census Bureau:
"A house is considered for sale when a permit to build has been issued in permit-issuing places or work has begun on the footings or foundation in nonpermit areas and a sales contract has not been signed nor a deposit accepted."
Starting in 1973 the Census Bureau broke this down into three categories: Not Started, Under Construction, and Completed.

The third graph shows the three categories of inventory starting in 1973.

The inventory of completed homes for sale is still low, and the combined total of completed and under construction is also low.

New Home Sales, NSAThe last graph shows sales NSA (monthly sales, not seasonally adjusted annual rate).

In December 2014 (red column), 34 thousand new homes were sold (NSA). Last year 31 thousand homes were sold in December.  This is the highest for December since 2007.

The high for December was 87 thousand in 2005, and the low for December was 23 thousand in 1966 and in 2010.

This was above expectations of 450,000 sales in December, and with a decent finish to 2014, sales increased 1.2% from 2013. "An estimated 435,000 new homes were sold in 2014. This is 1.2 percent above the 2013 figure of 429,000."

I'll have more later today.