November New Home Sales

The Commerce Department’s report on new home sales in November was as great a disappointment as the National Association of Realtors’ existing home sales report for the same month was powerfully positive.  Not only did sales plunge by 11%, but negative revisions were also posted to September and October as well.  The supply of new homes, at just 235,000 nationwide, while it represents a heavy 7.9 month supply, is at the lowest level seen since back in 1971.  Some good news could still be found in the report which showed a firming of prices; the median cost of a new home was up 3.8% to $217,400 and is now down year-over-year a meager 1.9%.  Despite the dour nature of this release, hope for the future is to be found in the expansion and extension of the government’s home buyer’s stimulus program, especially in light of the robust existing home sales data.  We will be very interested in next month’s figures to see if this report is a singular outlier or marks the beginning of a more sinister trend.  Our guess is that future months will show a more positive trend continues to build.