November New Home Sales

New home sales continued to improve in November according to the Census Bureau.  The seasonally adjusted annual rate of sales was 377,000 units.  This is an increase of 4.4 percent over October as the previous month’s tally was revised down to 361,000 units from 368,000.  Year-over-year, the indicator has improved by 15.3 percent.

Prices benefited for the month as well.  The median home price improved by 3.6 percent to $246,200.  The average price jumped over 10 percent to $299,700.  The jump in average price was impacted by the composition of the sales.  Fewer homes were sold on the lower end of the pricing spectrum while the number of homes sold in the $500,000-$749,999 category roughly doubled.

Prices are likely being influenced by, among other things, a relatively small inventory.  Seasonally adjusted, there were 149,000 homes for sale. This is slightly more than in October, but with the faster pace of sales, the inventory measured in months fell to 4.7 from 4.9.

Construction jobs were hurt tremendously in the downturn, but this area of the labor market may have better days ahead.  Of the homes sold in November, only 37 percent of them were completed.  Roughly 30 percent of the units sold were not started, with the rest being under construction.  A similar mix is seen in the units for sale at the end of the period.  Only 27.1 percent of the new homes on the market are finished being built.  Along with the new home sales pace gaining momentum, the median number of months a home is for sale has been declining.  It was only 5.3 month in November.  The current inventory turnover is much faster than the 8.8 months pace seen as recently as August 2012.  If the trajectory continues, builders are going to need more hammers swinging.         (by C. Cox)