New Home Sales: Increase Sharply

January 27, 2016
Bottom Line: New home sales rose sharply more than expected in December, the highest level since February 2015. Sales over the last three months have averaged 506K and are 1.8% above the 6 month average of 497K. The months supply dropped modestly as sales rose more than inventories. New home prices declined on a year over year basis. New Home Sales ROSE by 10.8% to 544k, after the prior month was revised modestly higher to 491k. This compared with market expectations for an increase to 500k, from the unrevised November level of 490k. While the trend is still rising and sales are now 9.9% ABOVE their year ago level, they are still a stunning 60.8% BELOW their July 2005 peak, The Inventory of Homes Available for Sale ROSE by 2.6% to 237k. Inventories are now 11.8% ABOVE their year ago level but still 58.6% BELOW their July 2006 peak level. Combined with the increase in sales, the Months' Supply dropped to 5.2 months from 5.6 months. This is moderately BELOW a "normal" level of 6.0 months and well BELOW its peak of 12.2 in January 2009. Home Prices FELL with median prices 4.3% BELOW their year ago level and with average prices 7.3% BELOW their year ago level. Both median and average home prices are now lower on a year over year basis.
Article by contingentmacro