In Depth Analysis: CalculatedRisk Newsletter on Real Estate (Ad Free) Read it here.

Thursday, January 28, 2021

A few Comments on December New Home Sales

by Calculated Risk on 1/28/2021 03:31:00 PM

New home sales for December were reported at 842,000 on a seasonally adjusted annual rate basis (SAAR). Sales for the previous three months were revised down slightly, combined.

Annual sales in 2020 were at 811,000, up 18.8% from 683,000 annual sales in 2019, and the best year for new home sales since 2006.

This was at consensus expectations for December, and well above analysts forecasts for 2020. Clearly low mortgages rates, low existing home supply, and favorable demographics (something I wrote about many times over the last decade).  A surging stock market have probably helped new home sales too.

Another factor in the strong headline sales rate, over the last the second half of 2020, was the delay in the selling season.   Usually the strongest sales are in the March to June time frame, but this year the strongest sales months were later in the year - so the usual seasonal factors boosted sales in late Summer and Fall.

Earlier: New Home Sales increase to 842,000 Annual Rate in December; Sales up 18.8% in 2020.

New Home Sales 2018 2019Click on graph for larger image.

This graph shows new home sales for 2019 and 2020 by month (Seasonally Adjusted Annual Rate).

The year-over-year comparison will be easy in early 2021 - especially in March, April and May.

However, sales will likely be down year-over-year in August through October - since the selling season was delayed in 2020.

And on inventory: note that completed inventory is near record lows, but inventory under construction has been increasing.