December 2018 New Home Sales
Submitted by Atlas Indicators Investment Advisors on March 11th, 2019
Data for December 2018 New Home Sales were finally tabulated. Like many indicators produced by the government, the partial shutdown delayed the final 2018 release for this indicator. On a seasonally adjusted annualized basis, 621,000 units were sold to end the year. This is an acceleration from November’s downwardly revised count of 599,000 (originally 657,000). Compared to the same period a year earlier, transactions fell 2.4 percent.
Three of the four regions improved, and one declined. Winter weather didn’t slow buyers in the Northeast as transactions soared 44.8 percent, putting the year-over-year tally up 16.7 percent. West sales managed an uptick of 1.4 percent but are still down 23.9 percent from a year earlier. The largest region (the South) experienced a gain of 5.0 percent and is up 7.4 percent in the past twelve months. Only the Midwest experienced a monthly decline, falling 15.3 percent, and sales in this portion of the country are off 3.2 percent from a year ago.
New home inventories climbed. There were 344,000 units for sales, rising 10,000 versus November. Of those available, only 71,000 units were completed, so there is a lot of construction expected to come. This will help push gross domestic product forward in the months ahead. Based on the pace of current sales, this supply of home would last 6.6 months, declining one-tenth of a month.
Prices proxies were higher. The median-priced home set the buyer back $318,600, up from $303,500 a month earlier. An average priced home was $9,400 more expensive, reaching $377,000 to end the year.
This iteration of new home sales helped the year-over-year trend. Despite being minus 2.4 percent, it’s a big improvement compared to minus 15.9 percent in November (and the worst since April 2011). As you can see in the chart above, the trend started decelerating in November 2017 and has been negative since September 2018. This is a weak point in our economy, but we are hopeful that the improving trend will continue in the months ahead and propel the year-over-year tally back above zero.
