NEW! CalculatedRisk Newsletter on Real Estate (Ad Free) Read it here.

Tuesday, March 05, 2019

New Home Sales increased to 621,000 Annual Rate in December

by Calculated Risk on 3/05/2019 10:15:00 AM

Note: This release is for December (this was delayed due to the government shutdown). The January report is scheduled for March 14th.

The Census Bureau reports New Home Sales in December were at a seasonally adjusted annual rate (SAAR) of 621 thousand.

The previous three months were revised down significantly.

"Sales of new single‐family houses in December 2018 were at a seasonally adjusted annual rate of 621,000, according to estimates released jointly today by the U.S. Census Bureau and the Department of Housing and Urban Development. This is 3.7 percent above the revised November rate of 599,000, but is 2.4 percent below the December 2017 estimate of 636,000.

An estimated 622,000 new homes were sold in 2018. This is 1.5 percent above the 2017 figure of 613,000."

emphasis added
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 last several years, new home sales are still somewhat low historically.

The second graph shows New Home Months of Supply.

New Home Sales, Months of SupplyThe months of supply decreased in December to 6.6 months from 6.7 months in November.

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

This is above 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 344,000. This represents a supply of 6.6 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 somewhat low, and the combined total of completed and under construction is a little low.

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

In December 2018 (red column), 44 thousand new homes were sold (NSA). Last year, 45 thousand homes were sold in December.

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

This was above expectations of 591,000 sales SAAR, however the previous months were revised down. I'll have more later today.