New Home Sales Jump In November

This morning's release of the November New Home Sales from the Census Bureau came in at 657K, up 16.9% month-over-month from a revised 562K in October.

Here is the opening from the report:

Sales of new single‐family houses in November 2018 were at a seasonally adjusted annual rate of 657,000, according to estimates released jointly today by the U.S. Census Bureau and the Department of Housing and Urban Development. This is 16.9 percent (±19.9 percent)* above the revised October rate of 562,000, but is 7.7 percent (±20.7 percent)* below the November 2017 estimate of 712,000.

The median sales price of new houses sold in November 2018 was $302,400. The average sales price was $362,400. [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.

New Home Sales

 

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.

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 75.0% increase in the US population since 1963. Here is a chart of new home sales as a percent of the population.

Population Adjusted

 

New single-family home sales are 11.2% above the 1963 start of this data series. The population-adjusted version is 36.5% below the first 1963 sales and at a level similar to the lows we saw during the double-dip recession in the early 1980s, a time when 30-year mortgage rates peaked at 18.63%. Today's 30-year rate is about 4.4%.

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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