New Home Sales Up 11.9% in December

This morning's release of the December New Home Sales from the Census Bureau came in at 811K, up 11.9% month-over-month from a downwardly revised 725K in November. The Investing.com forecast was for 760K. The median home price is now at $377.7K.

Here is the opening from the report:

New Home Sales

Sales of new single‐family houses in December 2021 were at a seasonally adjusted annual rate of 811,000, according to estimates released jointly today by the U.S. Census Bureau and the Department of Housing and Urban Development. This is 11.9 percent (±20.3 percent)* above the revised November rate of 725,000, but is 14.0 percent (±16.6 percent)* below the December 2020 estimate of 943,000. An estimated 762,000 new homes were sold in 2021. This is 7.3 percent (±5.1 percent) below the 2020 figure of 822,000.

Sales Price

The median sales price of new houses sold in December 2021 was $377,700. The average sales price was $457,300. [Full Report]

For a longer-term perspective, here is a snapshot of the data series, which is produced in conjunction with the Department of Housing and Urban Development. The data since January 1963 is available in the St. Louis Fed's FRED repository here. We've included a six-month moving average to highlight the trend in this highly volatile series.

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Over this time frame, we see the steady rise in new home sales following the 1990 recession and the acceleration in sales during the real estate bubble that peaked in 2005. Since 2011, we have seen a similar rise that has only recently retracted. We shall see if this retraction continues or is simply temporary.

The Population-Adjusted Reality

Now let's examine the data with a simple population adjustment. The Census Bureau's mid-month population estimates show a 76% increase in the US population since 1963. Here is a chart of new home sales as a percent of the population.

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New single-family home sales are 37.2% above the 1963 start of this data series. The population-adjusted version is 22.2% below the first 1963 sales and at a level similar to the lows we saw during the Great Recession. Today's 30-year rate is 3.56%.

For another perspective, here is a chart of the median new home sale prices back to 1963, inflation-adjusted. The data source is also the Census Bureau and can be found on the press release and website above. For inflation adjustment, we use the CPI-U, which is the Consumer Price Index for All Urban Consumers. We've included a 6-month moving average for this extremely volatile metric to give us a clearer sense of the trend.

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