New home sales in December plunged 10.4 percent in December to a seasonally adjusted annualized rate of 536,000.
Forecasters were not close to the mark. The Econoday Consensus estimate was 593,000 in a range of 569,000 to 607,000.
New Home Sales 1963-Present
Econoday Highlights
Consistently volatile is the well deserved reputation of the new home sales report. December sales of single-family homes plunged 10.4 percent in the month to a far lower-than-expected annualized rate of only 536,000. In a small offset, the prior two months have been revised upward by a combined 14,000 (to 598,000 for November and to 571,000 for October).
The 3-month average is of top importance when looking at this report and here the news is less downbeat. Yet the average is down, 12,000 lower in the month to 568,000 which is the softest reading since June. And the year-on-year sales rate, which had been in the double digits, is now negative, at minus 0.4 percent.
The good news in the report is supply which rose 10,000 to 259,000 and is 10.2 percent higher than a year ago. And the drop in sales has also eased the squeeze with supply relative to sales rising to 5.8 months from 5.0 months.
One factor behind December’s sluggish sales appears to have been prices where the median, in what is more good news, jumped 4.3 percent to $322,500 for a year-on-year gain of 7.9 percent.
The positives aside, this report follows Tuesday’s soft results on the resale side with both pointing to a housing sector that, instead of rising into year-end, faded instead. This report, specifically its implications for broker fees in the housing sector, may be a marginal negative for tomorrow’s fourth-quarter GDP report.
In Search of Good News
It it’s never-ending attempt to put a positive spin on things, Econoday seldom comes up short.
Here’s the most ridiculous spin of the day: “And the drop in sales has also eased the squeeze with supply relative to sales rising to 5.8 months from 5.0 months.”
Econoday has been harping about lack of supply for a long time. If only the plunge had been 50%, supply relative to sales would have jumped even more.
Mike “Mish” Shedlock
O/T They are loving Fillon’s explanation for wife’s salary given on TV interview, including the work of ” strategic informal reflection ”
Twitter is alive on the topic #penelopegate mostly in French.
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Who owns ECONODAY ? Soros ?
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Yet the crowd is fearless. You have to go back to 2007 to see VIX this low.
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“New home sales in December plunged 10.4 percent in December to a seasonally adjusted annualized rate of 536,000.”
…
Gotta love Econoday. Nary a word on interest rates screaming higher in December.
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Blame higher mortgage rates and the clamp down on Chinese individuals sending capital abroad. As I said before, what happens to an economic that cannot exit low interest rates because what little growth there is, is based on credit. Soon the Trump smelling salts will wear off and the market will take note.
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It’s an affordability problem, plain and simple. Higher rates are a drag to housing, especially when you have created a new bubble in home prices.
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Since real estate is all about location, location, location… the question is… WHERE are new homes not selling ??
Here in the Dallas area [probably the same in most major cities]… most major urban areas are already developed, so most new home divisions are too far away from the city center.
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Existing home sales are still doing just fine in established suburbs with good schools. Very low days on market and price/sq foot keeps climbing.
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The good news is prices will start to fall, making houses affordable.
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Little “Affordable Supply” and few “Qualified Buyers” results in lower sales and lower prices.
Its Econ 101.
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