New Home Sales: December Better But November Weak

Bottom Line: The Census Bureau released the delayed December New Home sales report showing a rebound in the final month of 2018 but sharp revisions lower in November sales. The final three months of 2018 averaged sales of just 590k annualized units, sharply below the average pace for the year of 621k and that of 2017, 616k. The Midwest saw declines in December as harsh weather hindered starts, but the Northeast led the gains. New home prices finished the year unchanged with the median home going for just under $319k. Overall, this report, with its negative revisions, confirms other reports suggesting housing activity was sharply slower in the 4th Quarter. New Home Sales ROSE by 3.7% to 621k, after the prior month was revised down to 599k. This compared with market expectations for a drop to 600k, from the unrevised November level of 657k. Sales are now 2.4% BELOW their year ago level, -- but they are still 55.3% BELOW their July 2005 peak. The Inventory of Homes Available for Sale ROSE by 3.0% to 344k. Inventories are now 17.0% ABOVE their year ago level but still 39.9% BELOW their July 2006 peak level. Combined with the increase in sales, the Months' Supply dropped to 6.6 months from 6.7 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 7.2% BELOW their year ago level and with average prices 6.4% BELOW their year ago level.