Wednesday, December 23, 2020

New Home Sales decrease to 841,000 Annual Rate in November

by Calculated Risk on 12/23/2020 10:14:00 AM

The Census Bureau reports New Home Sales in November were at a seasonally adjusted annual rate (SAAR) of 841 thousand.

The previous three months were revised down sharply.

Sales of new single-family houses in November 2020 were at a seasonally adjusted annual rate of 841,000, according to estimates released jointly today by the U.S. Census Bureau and the Department of Housing and Urban Development. This is 11.0 percent below the revised October rate of 945,000, but is 20.8 percent above the November 2019 estimate of 696,000.
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.

The last five months saw the highest sales rates since 2006.   This is strong year-over-year growth.

The second graph shows New Home Months of Supply.

New Home Sales, Months of SupplyThe months of supply was increased in November to 4.1 months from 3.5 months in October.

The all time record high was 12.1 months of supply in January 2009. The all time record low is 3.5 months, most recently in September 2020.

This is at the low end of the normal range (about 4 to 6 months supply is normal).
"The seasonally-adjusted estimate of new houses for sale at the end of November was 286,000. This represents a supply of 4.1 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 low, and the combined total of completed and under construction is lower than normal.

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

In November 2020 (red column), 55 thousand new homes were sold (NSA). Last year, 50 thousand homes were sold in November.

The all time high for November was 86 thousand in 2005, and the all time low for November was 20 thousand in 2010.

This was well below expectations and sales in the three previous months were revised down sharply. I'll have more later today.