New Home Sales Up In December, Better Than Forecast

This morning's release of the December New Home Sales from the Census Bureau came in at 621K, up 3.7% month-over-month from a revised 599K in November.

Here is the opening from the report:

Data collection and processing were delayed for this indicator release due to the lapse in federal funding from December 22, 2018 through January 25, 2019. Processing and data quality were monitored throughout and response rates were consistent with normal levels.

Sales of new single‐family houses in December 2018 were at a seasonally adjusted annual rate of 621,000, according to estimates released jointly today by the U.S. Census Bureau and the Department of Housing and Urban Development. This is 3.7 percent (±16.4 percent)* above the revised November rate of 599,000, but is 2.4 percent (±21.3 percent)* below the December 2017 estimate of 636,000. An estimated 622,000 new homes were sold in 2018. This is 1.5 percent (±6.5 percent)* above the 2017 figure of 613,000.

The median sales price of new houses sold in December 2018 was $318,600. The average sales price was $377,000. [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 5.1% above the 1963 start of this data series. The population-adjusted version is 39.8% 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%.

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