New Home Sales: Delayed But Better

Bottom Line: The Census Bureau released the delayed November New Home sales report this morning. It showed a significant rebound in sales as median home prices fell sharply, suggesting the mix of homes sold shifted towards lower priced homes. The geographic mix confirmed that with sales in the West (where there are more higher priced homes) falling, while the South and Northeast saw sharp gains. Overall, this report suggests some retrenching in the housing market with reasonable demand at lower prices but many buyers still hindered by affordability. On a trend basis it appears that new home sales stabilized at a modestly lower pace in the second half of 2018, a pace well below that of the 1st Half of '18 and all of '17 but still well above that of '16. New Home Sales ROSE by 16.9% to 657k, after the prior month was revised higher to 562k. This compared with market expectations for a decline to 570k, from the unrevised October level of 544k. Sales are now 7.7% BELOW their year ago level, -- but they are still 52.7% BELOW their July 2005 peak. The Inventory of Homes Available for Sale ROSE by 0.6% to 330k. Inventories are now 14.2% ABOVE their year ago level but still 42.3% BELOW their July 2006 peak level. Combined with the increase in sales, the Months' Supply dropped to 6.0 months from 7.0 months. This is modestly ABOVE a normal level of 6.0 months and well BELOW its peak of 12.2 in January 2009. Home Prices FELL with median prices 11.9% BELOW their year ago level and with average prices 6.7% BELOW their year ago level.