New home sales beat expectations, rise 10.8%
Fastest pace since February 2015
New home sales kept pace with previous strong economic housing news this month, except its rise isn’t conditional on TRID.
Sales of new single-family houses in December came in at a seasonally adjusted annual rate of 544,000, surpassing analyst expectations, according to the latest data from the U.S. Census Bureau and the Department of Housing and Urban Development.
This is 10.8% above the revised November rate of 491,000, and 9.9% above the December 2014 estimate of 495,000.
Chief Economist at Stifel Fixed Income Lindsey Piegza commented on the report saying that new home sales rose significantly more than the 2.0% expected, rising from 491,000 to a 544,000 unit pace, the fastest pace since February 2015.
Capital Economics’ response to New Home Sales said, “New home sales followed in the path of existing sales by surging 10.8% in the final month of the year. But while the jump in existing sales was due to volatility caused by TRID, the rise in new home sales provides further evidence that an improving labor market is helping to boost housing market activity.”
According to the November existing-home sales report from National Association of Realtors, the delayed closings due to TRID pushed a portion of November's would-be transactions into December.
Total existing-home sales, which are completed transactions that include single-family homes, townhomes, condominiums and co-ops, skyrocketed 14.7% to a seasonally adjusted annual rate of 5.46 million in December from 4.76 million in November.
The Capital Economics report added, “It is possible that the unseasonably warm weather helped sales in December. But we wouldn’t put too much weight on that explanation.”
“Looking at the fundamentals, the outlook for new home sales is positive. Housing demand is rising as more Americans secure jobs and banks loosen mortgage lending criteria,” the Capital Economics report said.
Looking back at the new home sales report, the median sales price of new houses sold in December dropped from $305,000 last month to $288,900. The average sales price also declined, falling to $346,400 from $374,900 in November.
Furthermore, the seasonally adjusted estimate of new houses for sale at the end of December increased to 237,000, up from 232,000.
This represents a supply of 5.2 months at the current sales rate.
In 2015, there was an estimated 501,000 new homes were sold, which is 14.5% above the 2014 figure of 437,000.