After experiencing the longest recorded partial government shutdown in American history, the Census Bureau and the Department of Housing and Urban Development finally released November’s new home sales data.
According to their analysis, new home sales reversed course from October, climbing 16.9% in November. In fact, sales of new single-family houses increased to 657,000.
Although this is up from October’s revised rate of 562,000, November’s sales still fell 7.7% below the previous year’s level.
“Unlike other housing indicators released during the shutdown, today's new home sales data shows a pick up from October's pace,” Realtor.com Chief Economist Danielle Hale said. “Still, the November figure trails the year ago sales figure, consistent with other data showing a sluggish finish to 2018 home sales.”
The median sales price of new homes sold was $302,400 and the average sales price was $362,400.
The seasonally adjusted estimate of new homes for sale by the end of the month was 330,000 in November, representing a supply of 6 months at the current sales rate.
Zillow Senior Economist Aaron Terrazas said that even after an autumn that proved stronger than first reported, new home sales are poised to end 2018 down decidedly from a year ago.
“November was an OK month in terms of volume, but was nevertheless well below November 2017, when a rush of buyers likely pushed their closing dates forward prior to new tax laws taking effect,” Terrazas continued. “And new home sales often track existing home sales closely – and after a decent November, existing home sales plummeted in December.”
Terrazas said the main culprit for the year-end weakness is a combination of mortgage rates that hit a seven-year high in November and a pullback in new construction starts that began early in the year.
“It’s been a season of anxiety for builders over the past few months, driven by worries of a potential broader economic slowdown, high construction costs and short-term uncertainty as a result of political volatility,” Terrazas said. “The partial federal government shutdown also delayed the collection and publication of critical housing market data widely used in long-term planning and decision making.”
That being said, Terrazas claims mortgage rates have the potential to be lifted, offering buyers more wiggle room in their budgets to afford somewhat pricier new homes.
“Even so, December and January sales are likely to be softer than November, despite lower interest rates,” Terrazas continued. “The path of mortgage rates has shifted definitively lower since the fall, but the builder pipeline is a long one and it will take them many months to respond to those changes, if they decide to at all given the longer-term storm clouds on the horizon.”.