New Home Sales: Below Expectations But Trend Still Strong
December 23, 2020
Bottom Line: New home sales fell in November after several months of robust sales. Weather and shutdowns for the virus slowed sales sharply in the Midwest and West. Sales in the largest region, the South, slowed only slightly. Inventories remained lean, and the market remained tight with months' supply rising to 4.1 months, still historically quite low. While there are reasons for concern given the decline's magnitude, several factors suggest this report was an anomaly in an uptrend. Even with this decline, sales are still stronger than at any time from 2007 until early 2020. New Home Sales FELL by 11.0% to 841k, after the prior month was revised lower to 965k. Sales are now 20.8% ABOVE their year-ago level, -- but they are still 39.5% BELOW their July 2005 peak. The Inventory of Homes Available for Sale ROSE by 1.8% to 286k. Inventories are now 11.2% BELOW their year-ago level. Combined with the decline in sales, the Months' Supply increased to 4.1 months from 3.6 months. This is modestly BELOW a normal level of 6.0 months and well BELOW its peak of 12.2 in January 2009. Home Prices ROSE with median prices 2.2% ABOVE their year-ago level and with average prices 1.5% ABOVE their year-ago level.
Article by Contingent Macro Advisors