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Thursday, January 28, 2021

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

by Calculated Risk on 1/28/2021 10:15:00 AM

The Census Bureau reports New Home Sales in December were at a seasonally adjusted annual rate (SAAR) of 842 thousand.

The previous three months were revised down sharply.

Sales of new single-family houses in December 2020 were at a seasonally adjusted annual rate of 842,000, according to estimates released jointly today by the U.S. Census Bureau and the Department of Housing and Urban Development. This is 1.6 percen above the revised November rate of 829,000 and is 15.2 percent above the December 2019 estimate of 731,000.

An estimated 811,000 new homes were sold in 2020. This is 18.8 percent above the 2019 figure of 683,000.
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 seven months saw the highest sales rates since 2006.   This was strong year-over-year growth.

The second graph shows New Home Months of Supply.

New Home Sales, Months of SupplyThe months of supply increased in December to 4.3 months from 4.2 months in November.

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 December was 302,000. This represents a supply of 4.3 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 a little lower than normal.

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

In December 2020 (red column), 55 thousand new homes were sold (NSA). Last year, 49 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 2010.

This was at expectations and sales in the three previous months were revised down slightly, combined. I'll have more later today.